The NEW mini budget 17th Oct 2022
JEREMY HUNT MAKES NEW BUDGET ANNOUNCEMENT
“So whilst we will continue with the abolition of the health and social care levy and stamp duty changes, we will no longer be proceeding with the cuts to dividend tax rates, the reversal of off-payroll working reforms introduced in 2017 and 2021, the new VAT-free shopping scheme for non-UK visitors or the freeze on alcohol duty rates.”
REMAINING: FIRST TIME HOME OWNERS
A doubling of the nil rate band to £250,000. And an immediate increase in First Time Buyers’ Relief from £300,000 to £425,000. First-time buyers will also see the maximum value of qualifying property increase to £625,000.
REMAINING: EMPLOYEES NI
National Insurance was increased in April to pay into a pot called The Health and Social Care Levy to bolster the NHS. Which is now being scrapped.
From 6th November, the 1.25% rates rise which was implemented since April 2022 will be scrapped.
The rates will then be:
- Employees’ Class 1 (primary) – 12% and 2%
- Employers’ Class 1 (secondary) – 13.8%
Note for high earners. Additional NI payable by employees earning over the upper earnings limit of £4,189 per month (£50,270 per year) will also be reduced by 1.25% to 2% from 6 November.
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. For taxpayers with annual earnings periods, e.g. directors, the rates will be 12.73% on earnings between £11,909 and £50,270, and 2.73% on higher earnings.
REVERSED: OFF PAYROLL WORKING – IR35 CHANGES S FOR SELF EMPLOYED/CONTRACTORS
In a big move, which will be a great relief for many we imagine, the highly complicated procedure for determining whether someone is employed or self employed AND MORE IMPORTANTLY, WHO IS RESPONSIBLE FOR IT’S DETERMINATION has shifted back to the individual worker, not the employer. We can only imagine it was very cumbersome to implement, not to mention the shift in working patterns this necessitated to minimise the risk for employers. So basically it’s ‘as you were’. The same rules apply for determination but it’s up to the contractor or self employed to prove their point if contested. This will probably see a rise in the use of contract and non payroll staff which may come as a relief for many. This comes into effect from 6th April 2023.
REVERSED: INCOME TAX
The basic rate of income tax will NOT fall to 19% from April 2023. At the same time, the additional highest rate of 45% will NOT be scrapped altogether, leaving 40% from April 2023.
REVERSED: TAX ON DIVIDENDS FOR LIMITED COMPANY DIRECTORS
Good Bad news for tax on dividends paid on or after 6 April 2023. The increase of 1.25% across the board will remain in place, so 7.5% increases to 8.75% and 32.5 increases to 33.75 and the additional higher rate will be 39.35%.
REVERSED: CORPORATION TAX
The increase in the main rate of corporation tax to 25%, due to apply from April 2023, has NOT been cancelled. The main rate will NOT remain at 19%. There will be a sliding scale between the 19% rate on profit over £50,000 and the new 25% rate of profits over £250,000. (as yet unannounced).
If you’d like to talk to us about any of this please get in touch with David via phone – 01763 257882 or email, david@theaccountancypractice.com or of course drop by the office.