How will the budget affect me / my business?
4th October, 2022
Following the new Chancellor’s “mini” Budget Statement in the Commons on the 23rd September, we’ve summarised some of the main points, how they have since been updated and what the potential impact will be for you and/or your business.
Income Tax, Dividend Tax & National Insurance
- The basic rate of tax will remain at 20% indefinitely. (This was due to be cut from 20% to 19% from 6 April 2023)
- The Dividend tax increase of 1.25% will go ahead as planned on 6th April 2023 (This was due to be reversed from April 2023) Our advice to clients would be NOT to delay paying dividends.
- The National Insurance increase of 1.25% is to be reversed from 6 November 2022 . This will cover Class 1 (both employee and employer), Class 1A , Class 1B and Class 4 (self-employed) NICs. If you use payroll software these changes should be applied automatically.
- The IR35 changes of 2017 and 2021 will no longer be reversed meaning that the current off-payroll rules will remain in place.
Corporation Tax & Capital Allowances
- The planned Corporation tax increase from 19% to 25% from April 2023 will now go ahead for all companies making more than £250,000 in profit.
- The Annual investment allowance, ie the amount companies can invest tax free, will remain at £1m indefinitely. In addition, new and start-up companies will be able to raise up to £250,000 under a scheme giving tax relief to investors.
Stamp Duty Land Tax
- The threshold at which zero rate is due has increased from £125,000 to £250,000. This translates into a tax saving of up to £2,500. This is effective from the 23rd September.
- The first-time buyers’ allowance has now increased with no stamp duty payable on the first £425,000 – applicable on purchases of £625,0000 or less. This is effective from the 23rd September.
- The additional rate of tax of 45% was set to be abolished, leaving the 40% rate as the top band but his change has now been reversed (3/10/22) with the top tax rate of 45% now reinstated.
There were a number of other measures announced, including a £2,500 cap on energy bills (which will now be in place for the next 6 months only i.e. until April 2023) as well as the creation of 40 new low-tax “investment zones”. VAT-free shopping for overseas visitors and a scrapping of planned increases in the duties on beer, wine and spirits, which were announced on the 23rd September have now been reversed.
Updated 3/10/22 and 18/10.22
If you have any questions on what these changes mean for you or your business, please do get in touch with the team at Haggards Crowther.