Mini Budget 2022

Mini Budget 2022

The chancellor Kwasi Kwarteng released a ‘Mini Budget’ on Friday 23^rd September.

In this blog post we will be giving you a roundup of everything that was announced in this ‘Mini Budget’.

Corporation Tax

Firstly, the corporation tax rise has been cancelled.

This means the rate is being kept at 19% and not increasing to 25%.

This was due to come into effect on the 1st of April 2023.

This reverses and will not be taking place.

Income Tax

The basic rate of Income Tax will be cut to 19p in April 2023, this is down by 1p, one year earlier than planned.

This gives around 31 million people on average £170 more per year.

The last cut to Income Tax was in 2008/09, and 19% Is the lowest that the basic rate has ever been in the modern Income Tax system.

Kwarteng also announced the 45% additional rate income tax band for those earning more than £150,000 will be completely scrapped.

Consequently, there will be a single higher rate of income tax of 40%.

Health & Social Care Levy

The 1.25% Health and Social Care Levy will end on the 6^th of November 2022.

Meaning that this will reduce the main and additional rates of:

• Class 1,
• Class 1A
• Class 1B
• Class 4 National Insurance contributions

According to the government, not proceeding with the Levy will reduce tax for 920,000 businesses by nearly £10,000 on average next year.

For SMEs, the government predicts that the savings will be around £4,200 on average for small businesses and £21,700 for medium sized firms from 2023/24.

Stamp Duty Land Tax

The changes to SDLT increase the amount that a purchaser can pay for residential property before they become liable for SDLT.

The residential nil rate tax threshold increases from £125,000 to £250,000.

The nil rate threshold for First Time Buyers’ Relief increased from £300,000 to £425,000.

The maximum amount that an individual can pay while remaining eligible for First Time Buyers’ Relief increases to £625,000.

IR35                                          

Over the last 20 years, there have been numerous changes to the tax system to try and address ‘disguised employment’ and to generate additional tax and NICs accordingly.

In a surprise announcement, the government has stated that it will repeal the off payroll working rules from 6 April 2023.

From this date, workers providing their services via an intermediary will once again be responsible for determining their employment status.

And paying the appropriate amount of tax and NICs.

Overview

• Corporation tax rise has been scrapped – staying at 19%
• The basic rate of Income Tax cuts to 19p in April 2023
• The 1.25% Health and Social Care Levy will end on the 6^th of November 2022
• SDLT: The residential nil rate tax threshold increases from £125,000 to £250,000.

If you have any questions regarding the Mini Budget announcements and the impacts it may have on you or your business, please get in touch on 01179 902218 or email us on hello@spectrum-accountancy.co.uk

More information here

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Categorised in: Accountancy Services, Budget, Cost of Living, HMRC, Small Business

This post was written by Daisy Vowles