UK Chancellor, Kwasi Kwarteng announced a series of tax cuts & changes in his mini-budget on 23rd Sept 2022, and yesterday did a U-turn on cancelling the drop from 45% to 40% on the highest tax rate.
A quick list of how the mini-budget will affect tax payers is listed below:
1. Income taxes
The top rate of income tax for those earning more than £150,000 per annum was reduced from 50% to 45% by a previous Chancellor in 2013 this was planned to be lowered to 40% but has now been cancelled by the government U-turn and will remain at 45%.
From 6th April 2023 the rate of income tax on income between £12,571 & £50,270 per annum will be reduced from 20% to 19%.
2. National Insurance reversal
Chancellor confirms the 1.25 percentage national insurance rise introduced earlier this year by the previous Chancellor will be cancelled from 6th November 2022 i.e. from December’s payslip onwards.
3. Stamp duty cut
Before there was no stamp duty to pay on the first £125,000 of a property’s value. It has now been doubled to £250,000.
The no stamp duty threshold for first-time buyers will rise from £300,000 to £425,000.
The max property value for first-time buyers’ stamp duty relief will rise from £500,000 to £625,000.
4. Corporation tax stays at 19%
Corporation tax rises have been scrapped, the previous Chancellor Rishi Sunak announced that the rate of corporation tax would be increasing from 19% to 25%, from 6th April 2023.
So now businesses with profits below £50,000 will stay at the 19% rate, as well as businesses with profits over £250,000 that were meant to pay 25% rate ie everyone stays at 19%.
5. Changes to IR35
From 6th April 2023, the previous IR35 rules introduced in 2017 and 2021 have been reversed. Allowing individuals to contract instead of work as employees again ie self employed off-payroll working through a limited company. The changes mean its up to the contractors themselves to make sure they have the right status and are paying the right amount of tax instead of putting the burden on employers.
6. Strikes legislation
The government says it will legislate to stop “militant trade unions” from closing down key infrastructure through strikes.
The laws will require unions to put pay offers to a member vote, to ensure strikes can only be called once pay talks have genuinely broken down, he says.
7. Investment zones
The government confirmed that almost 40 investment zones will be created with tax breaks for businesses. Areas included are the West Midlands ,Tees Valley, Norfolk and the west of England etc.
8. Energy Bills
Freeze household energy bills at £2,500 for a typical household and a price cap on energy bills for commercial properties also.
(AIA) Annual investment allowance, the total amount a company can invest tax free, stays at £1 Million.
New & start-up companies are able to raise up to £250,000 under a scheme giving tax relief to investors in their business
Share options for (PAYE) employees doubled from £30,000 to £60,000
10. Bankers’ bonuses
Chancellor confirms the bankers’ bonus cap will be scrapped.
By Anni Khan at Tax Affinity Accountants
Tax Affinity Accountants are experts Business, Tax and Accountancy. With branches in Worcester Park and Kingston upon Thames and Epsom and Ewell they are considered in the Industry to be expert business accountants and tax advisors for both individuals and small & medium sized businesses (SME's). Helping and supporting both individuals and limited company owners / self employed people throughout the UK and the world, they regularly help clients grow their business providing tailored advice and support. Their support has been considered invaluable by many clients and key to their success.
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