On Monday 17 October, following the sacking of Kwasi Kwarteng, the new Chancellor Jeremy Hunt reversed most of the elements of September’s Mini Budget.
A full revised summary can be found in the link below. Highlights include:
Axing of National Insurance Contributions (NICs) rise confirmed
- The increase in NICs will be reversed from 6 November 2022
- Primary Class 1 NICs (employees) will generally reduce from 13.25% to 12% and 3.25% to 2%
- Secondary Class 1 NICs (employers) will reduce from 15.05% to 13.8%
Income Tax cuts reversed
- Basic rate of income tax will remain at 20% indefinitely
- 45% Income Tax on earnings over £150,000 no longer abolished
Reduction in Dividends tax rate will not proceed
From April 2023, the 1.25% proposed reduction in rates of taxation will not proceed, meaning that the rates will stay as follows:
- the dividend ordinary rate – 8.75%
- the dividend upper rate – 33.75%
- the dividend additional rate – 39.35%
- as Corporation Tax due on directors’ overdrawn loan accounts is paid at the dividend upper rate, this will remain at 33.75%
Corporation Tax cuts reversed
- Corporation Tax will now rise from 19% to 25% from April 2023
- The 19% rate will become a small profits rate payable by companies with profits of £50,000 or less
- Companies with profits between £50,001 and £250,000 will pay tax at the main rate reduced by marginal relief
Stamp Duty Land Tax cuts confirmed
For transactions with effective dates on and after 23 September 2022 in England and Northern Ireland the following will apply:
- the residential nil rate tax threshold will be increased from £125,000 to £250,000
- the nil rate threshold for First Time Buyers’ Relief will be increased from £300,000 to £425,000
- the maximum amount that an individual can pay while remaining eligible for First Time Buyers’ Relief is increased to £625,000
There are no changes in relation to purchases of non-residential property.
Changes to IR35 and off-payroll rules
Off-payroll working rules will no longer be repealed from 6 April 2023. Current off-payrolling rules will remain in force.
To read our detailed summary, please Click Here.
The Chancellor is expected to announce further changes to fiscal policy on 31 October 2022.
For further help or advice, please do get in touch.Latest Link: A summary of the Spring Budget 2023