 Photo by Towfiqu barbhuiya on Unsplash | Last week the Chancellor delivered a “mini budget” aimed at stimulating the economy. Many of the measures announced were given much advance coverage but some things were unexpected: |
- Changes to IR35 basically taking us back to where we were
- Removing the top rate of income tax (England) from April
- Changes to Stamp Duty
I have set out the main changes below although there remains some uncertainty on some of the transitional rules for things like Capital Allowances.
Stamp duty land tax
The nil rate band for Stamp Duty was doubled to £250,000, while first-time buyers will pay no SDLT up to £425,000, and can claim relief on properties valued up to £625,000. These cuts will take place in England and Northern Ireland only.
Corporation tax and capital allowances
The planned increase in corporation tax to 25% has been cancelled, meaning that it will stay at 19% for the foreseeable future.
The annual investment allowance will remain at £1m, rather than falling to £200,000, which brings some certainty to business. There was no announcement on what will happen with the 130% super deduction, however, so presumably this will end in April 2023 as announced previously although there were some very complex transitional rules to align us to the new rate of Corporation Tax and the impact is still unclear.
The annual investment allowance will remain at £1m, rather than falling to £200,000, which brings some certainty to business. There was no announcement on what will happen with the 130% super deduction, however, so presumably this will end in April 2023 as announced previously although there were some very complex transitional rules to align us to the new rate of Corporation Tax and the impact is still unclear.
Investment zones
Locations within 38 local authorities in England will benefit from new investment zones. These will grace businesses with time-limited tax benefits, along with planning flexibilities.
While England is the only nation within the UK where regions have been announced which could benefit from these new investment zones reliefs, the government says that it is working with the devolved governments to provide them in Scotland, Wales and Northern Ireland as well.
While England is the only nation within the UK where regions have been announced which could benefit from these new investment zones reliefs, the government says that it is working with the devolved governments to provide them in Scotland, Wales and Northern Ireland as well.
VAT-free shopping
VAT-free shopping ended for Great Britain in 2020, after the UK left the EU. It is currently only available in Northern Ireland. The Chancellor announced that this would be reintroduced through a refund scheme for non-UK visitors to Great Britain. This can be applied to goods bought on the high street, airports and other departure points, and exported in personal baggage. This new scheme will be digital.
Off-payroll working
Another major surprise in the mini-Budget was the reversal in the changes to off-payroll working rules that were brought in for the public sector in 2017 and the private sector in 2021. This doesn’t abolish IR35, but takes us back to the rules in place from 2000.
While this does make it easier for companies to engage with people through personal service companies, some of the issues with IR35 remain and the risk is passed back to the ‘worker’
While this does make it easier for companies to engage with people through personal service companies, some of the issues with IR35 remain and the risk is passed back to the ‘worker’
Alcohol duty
The Chancellor also announced a freeze in duty rates for all categories from 1 February 2023 to support hospitality businesses.
Income Tax
The big announcement here was the removal of the 45% additional rate of tax, brought in after the financial crisis. Now all higher rate taxpayers will pay the 40% rate. At the same time, the planned cut to the basic rate of income tax to 19% has been brought forward to April 2023.
National Insurance and Dividend Tax
As previously reported, national insurance contributions will be cut by 1.25 percentage points from November this year. The health and social care levy, due to come in from April 2023, has also been cancelled.
The government is also reversing the 1.25 percentage point increase in dividend tax rates from April 2023. Additional rate taxpayers will also see the additional rate of dividend tax abolished.
I would fully expect the annual Self Employed Threshold to be adjusted to align with this
The government is also reversing the 1.25 percentage point increase in dividend tax rates from April 2023. Additional rate taxpayers will also see the additional rate of dividend tax abolished.
I would fully expect the annual Self Employed Threshold to be adjusted to align with this
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