September 2022 Newsletter | Cylchlythyr Misol Medi 2022
MINI BUDGET SPECIAL
The new Chancellor, Kwasi Kwarteng, has announced a raft of tax changes in his "Mini Budget" that will affect us all. Here is a summary of the key changes:
1. Income tax & National Insurance
- Basic rate of income tax will be reduced from 20% to 19% from April 2023
- 45% tax rate has been abolished (with one single higher rate of 40% from April 2023)
- The 1.25% percentage point increase in National Insurance for employees, employers and the self-employed will be reversed from 6 November 2022
- The 1.25% 'Health and Social Care Levy' due to be payable by working pensioners on their earnings from April 2023 will be scrapped.
- The additional 1.25% of tax on dividends will also be scrapped from April 2023
From April 2023, for an individual earning £20,000 a year, they will pay c.£160 less of tax a year, whilst an individual earning £100,000 a year will pay c.£1,500 less of tax.
2. Corporation tax
- Planned increase in corporation tax from 19% to 25% from April 2023 have been scrapped. Rates will remain at 19%.
- Annual Investment Allowance will permanently remain at £1m to encourage business investment in plant & machinery
3. Other key announcements
- Tightening of rules for Universal Credit, with reduced benefits if people do not fulfil job search commitments
- IR35 rules from 2017 and 2021 for "off-payroll working" will be repealed (exact timings and details yet to be provided)
- Planned increases to alcohol duty on beer, cider, wine and spirits cancelled
- No stamp duty payable on first £250,000 (or £425,000 for first time buyers) in England & Northern Ireland (stamp duty is a devolved matter in Wales)
4. What did we know already?
- Businesses to receive support for their energy costs, with prices fixed for 6 months from October at around half their expected cost.
- Bank of England has increased its base interest rate to 2.25% from 1.75% (with further future increases expected in November 2022)
- Inflation remains high at c.10% and the pound remains weak against the dollar and the euro (with a significant weakening following the Chancellor's Mini Budget announcements)
We will continue to keep you updated on significant tax changes and Government announcements!
