Further to the chancellor Kwasi Kwarteng’s announcements in the Mini Budget on Friday, we have detailed below some key changes coming into effect;
UPDATED: 18/10/2022 – With the newly appointed chancellor Jeremy Hunt, we have updated the mini-budget with strikethrough for all the policies that have been reversed.
Personal Tax
Cut in basic rate of income tax from 20% to 19% from April 2023 (Does not apply in Scotland)The 45% tax rate will be abolished for those who earn over £150,000pa, and one single higher rate of income tax of 40% will apply from April 2023.The 1.25% increase in dividend tax (to correspond with the national insurance increase) will be reversed with effect from April 2023. The dividend rates from April 2023 will be 7.5% and 32.5% on dividend income above £2,000.The government has announced a one-year transitional period that will allow pension schemes to claim at 20% in 2023/24 (This will then change to 19% from 2024/25 in line with the basic rate of income tax).IR35 rules are to be simplified, and the 2017 & 2021 reforms have been repealed. Workers providing their services via an intermediary will once again be responsible for determining their IR35 status and paying the appropriate amount of tax & NIC.
National Insurance
- The 1.25% increase in National Insurance which was introduced in April 2022 will be reversed with effect from 6th November 2022
- The Health and Social Care Levy that was to be introduced in April 2023 has now been cancelled.
Business Tax
The planned increase in corporation tax from 19% to 25% in April 2023 has now been cancelled.- The planned decrease in the Annual Investment Allowance (AIA) from £1,000,000 to £200,000 has now been cancelled. The £1,000,000 limit has now been made ‘permanent’.
Stamp Duty
- The threshold above which Stamp Duty Land Tax must be paid on the purchase of residential properties in England and Northern Ireland has been doubled from £125,000 to £250,000, with effect from 23rd September 2022 (Additional property purchases other than your main residence are still subject to a 3% surcharge).
- The threshold above which Stamp Duty Land Tax must be paid for first-time buyers has increased from £300,000 to £425,000, and the maximum value of a property on which a first-time buyer can claim relief has increased from £500,000 to £625,000 (Effective from 23rd September 2022).
VAT
The government will introduce a new VAT-free shopping scheme for non-UK visitors to Great Britain which will enable the visitors to obtain a VAT refund on goods purchased in the high street, airports and other departure points and exported from the UK.The planned increases in alcohol duty rates have been cancelled, which will save on average 7p on each pint of beer, 4p on a pint of cider, 38p on a bottle of wine and £1.35 on a bottle of spirits.
For summary information on what the 2020 Budget means to business click here and an article on how to spot HMRC scam calls click here
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