Following The Chancellor, Kwasi Kwarteng’s Mini Budget/Fiscal Statement announcement today, the message and focus from the ‘new’ Government is on growth, and growing the UK economy, opening it up for overseas investment and trade, as well as putting a little extra back into people’s pockets.
We expect to share further information and insights in due course once the dust has settled and finer details are revealed. If you would like to talk to us in further detail about any aspects, please don’t hesitate to contact us.
PERSONAL TAX
“The aim is to create a simpler tax system for all.”
‘Health and Social Care Levy’ – From 6 November 2022 the recent ‘NHS Levy’, added to National Insurance contributions will be abolished.
Dividend Tax – The 1.25% increase to income tax on dividends, previously announced alongside the Levy, and introduced in April 2002, will be reversed from April 2023.
IR35 (Off Payroll Working) Rules – From April 2023 the rules will be simplified for all to understand, and the 2017 and 2021 reforms of these rules will be revoked.
45% ‘Additional Rate’ of income tax – From April 2023, this will be abolished, therefore the highest rate of income tax payable in the UK will be 40% on savings and non- savings income, and 32.5% on dividend income.
Basic rate of income tax (currently 20%) – With effect from April 2023, will be cut by 1p in the pound to 19%.
Stamp Duty Land Tax – Residential nil-rate threshold to increase from £125,000 to £250,000. Nil-rate threshold for First Time Buyers’ Relief to increase from £300,000 to £425,000, with the maximum amount that an individual can pay for a home while remaining eligible for First Time Buyers’ Relief, also increase from £500,000 to £625,000.
‘Benefits’ strategy – The Government announced a proposed reduction in benefits if the appropriate ‘Job Search Commitments’ are not fulfilled.
VAT AND DUTY
The Chancellor announced a plan for ‘VAT Free’ shopping for overseas visitors – similar to the ‘Duty Free’ methods seen in overseas territories throughout the world.
BUSINESS
Corporation Tax – The proposed rise in the rate of Corporation tax from 19% to 25% has been scrapped, remaining at 19% for the foreseeable future.
Annual Investment Allowance (AIA) – Due to reduce to £200,000 from April 2023, this limit will now remain at £1,000,000 permanently – encouraging businesses to invest in plant and machinery, equipment and similar assets.
Enterprise Investment Scheme (EIS), Venture Capital Trusts (VCT) and Company Share Option Schemes – Limits and reliefs will now remain in place beyond their expected 2025 expiry date.
New ‘Investment Zones’ to be created, to include Tees Valley – The purchase by a business (or creation) of land and buildings for use solely in the business, will no longer attract a Stamp Duty Land Tax liability in an investment zone.
Tax Sites will be created, offering favourable tax advantages to companies within these areas.
Businesses in these areas who employ a new employee will benefit from a 0% rate of employers National Insurance on the first £50,000 of salary paid to that new employee.
GENERAL
The ‘Energy Plan’ that was proposed recently and is due to come into force on 1 October 2022, in an attempt to tackle the rising cost of living/energy crisis in the UK, will cost the UK £60 billion for just a six month period from October, the Office of Fiscal Studies warns.
Again, please do not hesitate to contact us if you have any questions from today’s announcements, or would like to discuss the tax saving/planning opportunities that may be available to you.
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