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A tax-cutting mini budget
Michelle Davies,
A tax-cutting mini budget
The new Chancellor certainly delivered tax-cutting measures in the mini budget as expected. A package of measures was announced to deliver a pro-growth, simplified tax system that supports business investment across the United Kingdom, and allows people to keep more of their own money
Income tax. The basic rate of income tax will reduce to 19% from April 2023, a year earlier than planned. The additional rate of 45% will be removed completely, so the highest rate of tax will be 40% from April 2023. For dividends paid on or after 6 April 2023 the additional rate of 39.35% will be removed leaving dividends for basic rate taxpayers chargeable at 7.5% and the higher rate at 32.5%.
National Insurance. The 1.25% rise in NI rates that have applied since April 2022 will be removed from 6 November. The rates will revert back to:
- Employees’ Class 1 (primary) - 12% and 2%
- Employers’ Class 1 (secondary) - 13.8%
For 2022/23 there will be a transitional rate of 14.53% for Class 1A and 1B NI contributions, i.e. that paid by employers on taxable benefits in kind.
Self-employed taxpayers will pay composite rates of Class 4 NI for 2022/23. The rates will be 9.73% on profits between £11,909 and £50,270 and 2.73% on profits above the upper limit.
The Health and Social Care Levy, which was due to replace the April 2022 NI increases, will no longer go ahead.
Corporation tax. The main rate will remain at 19% with the increase to 25% being cancelled.
Capital allowances. The annual investment allowance of £1million has been made permanent and will not reduce in April 2023 as originally planned.
Stamp Duty Land Tax. The nil rate threshold will double to £250,000, increasing the level which first time buyers start paying SDLT to £425,000.
Other. The seed enterprise investment scheme and company share option plan are being enhanced to help more UK start-ups raise higher levels of finance. The government is also consulting to introduce investment zones which will attract similar tax breaks as freeport sites.
