Mini-Budget 2022: At a glance

23 Sep 2022

Fiscal Statement 2022

The Chancellor, Kwasi Kwarteng, delivered the Mini-Budget on 23 September 2022. The key announcements are summarised below.

 

Individuals

  • From 6 April 2023, the basic rate of income tax will reduce from 20% to 19%.
  • The 45% additional rate of income tax was due to be abolished, but this was reversed on 3 October 2022.
  • There will be a four-year transition period for Gift Aid relief, which will remain at 20% until April 2027.
  • There will also be a one-year transition period for Relief at Source (RAS) pension schemes, and they can continue to claim relief at 20% until April 2024.
  • The 1.25% Health and Social Care Levy will be abolished and from 6 November 2022 Class 1 and Class 4 National Insurance Contribution rates will return to pre-April 2022 levels.
  • From 6 April 2023, the dividend rates of income tax will return to 7.5%, 32.5% and 38.1%. The 38.1% additional rate was due to be abolished, but this was reversed on 3 October 2022.
  • Scottish rates of tax will be announced at the Scottish Budget later this year.

Businesses

  • The planned increase in the corporation tax rate to 25% from 1 April 2023 has been cancelled. The rate will remain at 19%.
  • The planned reduction in the Annual Investment Allowance (AIA) has also been cancelled. The AIA will remain at £1 million permanently.
  • The Super Deduction is still planned to end on 31 March 2023.
  • From 6 April 2023, companies will be able to raise up to £250,000 under the Seed Enterprise Investment Scheme (SEIS), an increase from £150,000.
  • To make SEIS available to more companies, the age limit of companies will increase to three years (from two years) and the gross asset limit for SEIS companies will increase to £350,000.
  • The maximum investors may invest annually into SEIS companies will double to £200,000.
  • Qualifying companies will be able to issue up to £60,000 of Company Share Option Plan (CSOP) options to employees, doubling the current limit.
  • Introduction of Investment Zones offering a number of tax reliefs and incentives.
  • Diverted Profit Tax will remain at 25%.
  • Bank Corporation Tax Surcharge will remain at 27%.

Stamp Duty Land Tax (SDLT)

  • From 23 September 2022, the 0% band for SDLT has doubled to £250,000.
  • For first-time buyers, the 0% band will increase from £300,000 to £425,000. The maximum property value a first-time buyer may purchase has also increased from £500,000 to £625,000.

Other announcements

  • Off payroll working (IR35) measures introduced in 2017 and 2021 repealed, moving the compliance obligations back to personal service companies.
  • Planned Alcohol Duty increases cancelled.

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“For a Mini-Budget there were a significant number of announcements made by the Chancellor in his speech, and covered in more detail in the accompanying Growth Plan.

With further announcements on areas such as planning reform and business regulation due in the coming weeks, it will be interesting to see the longer-term impact of the new government’s shift in fiscal policy on the economy. In the meantime, the changes provide opportunities for taxpayers – both businesses and individuals –  to take advantage of lower tax rates in the coming months.”

Robert Langston, National Tax Partner

 

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