The government on Friday announced its Mini-Budget, with Chancellor Kwasi Kwarteng setting out a range of measures designed to navigate inflation, rising energy costs and promote economic growth.
What are the main takeaways from the mini-budget 2022
Here are the main points:
Income Tax
- The basic rate for earnings over £12,570 is being cut from 20% to 19% from April 2023.
- The 45% additional rate income tax band for those earning over £150k will be scrapped entirely. The 40% higher rate income tax band for incomes above £50,271, will remain.
National Insurance
- The National Insurance hike of 1.25% on both employees and employers contributions introduced in April this year, will be cancelled from 6th November. This takes employees rates from 13.25% back to 12.5% and employers rates from 15.05% back to 13.8%.
- The Health and Social Care Levy will also be cancelled.
Corporation Tax
The increases to corporation tax due to take effect from April 2023 will no longer take place.
The rate of corporation tax will now remain at 19% with the planned increase from April 2023 from 19% to 25% for companies whose taxable profits were more than £250k being scrapped.
Dividend Tax
The hike in basic rate dividend tax from 7.5% to 8.75% introduced in April 2022 will be reversed in the new tax year.
AIA
The Annual Investment Allowance was due to be reduced to £200k, but will now remain at £1m.
Stamp Duty Land Tax
- In the current system, there is no stamp duty to pay on the first £125k of a property’s value. This threshold has now doubled to £250k.
- First-time buyers currently don’t pay any SDLT on the first £300k. This will be raised to £425k.
- Additionally, the value of the property on which first-time buyers can claim relief has increased from £500k to £625k.
IR35
The IR35 reforms known as “off-payroll working” in April 2017 and April 2021 which had made it much harder for contractors to offer their services via their own limited companies are being withdrawn from April 2023.
The IR35 changes introduced in April 2021 meant that the responsibility for determining a contractor’s IR35 status was passed over to the end client.
This resulted in many directors having to close their personal service companies and going into employment. Now, it will again be the contractor determining whether their role is inside or outside the remit of IR35.
Not only will the changes help contractors to win contracts, but businesses looking for flexible workers will benefit from not having to employ them.
The key reforms are positive news for small businesses, contractors, and individuals.
If you want to find out more about anything in the mini-budget and how it affects you, please get in touch.
