Open-access content Wednesday 28th September 2022 — updated 11.54am, Thursday 6th October 2022
John Woolley of Technical Connection provides key takeaways from the government’s mini-Budget (update)
Kwasi Kwarteng, the new Chancellor, announced his mini-Budget statement in the House of Commons on 23 September.
The highlights for advisers (and their clients) are as follows:
- With effect from 6 November 2022, there will be a reversal in the 1.25% increase in NIC rates (and abolition of the HSC levy) for employees, employers and the self-employed. However, it seems there is no intention to reverse the increase in primary threshold that took effect on 5 July 2022. Employees will be in a better “NIC position” than they were in 2021/22. Also, the self-employed will get the benefit of these changes for the whole of 2022/23; employees just from 6 November 2022.
- A reduction in basic rate tax to 19% from 6 April 2023. This could increase the income tax on chargeable event gains for higher rate taxpayers to 21%. Also, the “at source” Government relief that will be credited to a pension plan will reduce to 19% from 6 April 2024.
- Originally, it was proposed that the 45% additional rate income tax band would be abolished from 6 April 2023. That proposal has been scrapped so the rates of tax that will apply on earnings, rent and savings income from 6 April 2023 will be 19% (basic rate taxpayers), 40% (higher rate taxpayers) and 45% (additional rate taxpayers). Different rates apply in Scotland.
- A reversal of the increase in corporation tax rates due to come into effect on 1 April 2023. Profits (without limit) will continue to be taxed at 19% meaning more net profits will be available for dividends and employer pension contributions will continue to get relief at 19%.
- The restoration of the pre-6 April 2022 dividend tax rates of 7.5% (basic rate), 32.5% (higher rate) and 38.1% ( additional rate).
- With immediate effect, the stamp duty land tax threshold at which the charge begins has increased to £250,000. For first time buyers, the threshold has increased to £425,000 (£625,000 in London)
- The previous rules on the employment status of a contractor known as IR35 are to be repealed so that the responsibility for paying the correct tax and NICs will fall on the individual providing the services.
Please bear in mind that given the current political interest in the proposals in the Mini Budget, future changes cannot be ruled out, either at full Budget stage or earlier.
If you are interested in a regular tax related bulletin that you can white label and send to professional connections, please get in touch at firstname.lastname@example.org