AI mini budget

The new Chancellor Kwasi Kwarteng published the Government’s Growth Plan today, designed to tackle energy costs, bring down inflation, and support businesses and households. A 2.5% trend growth in GDP is targeted via the measures.

Here is our easy-to-digest summary of the key measures unveiled which affect business owners.

NIC increases cancelled

In a move to partially offset rising business costs, the 1.25 percentage point uplift in National Insurance Contributions (NICs) rates that was introduced in April 2022, will end on 6‌‌‌ ‌‌November 2022.

The Health and Social Care Levy (HSCL) of 1.25% due to be introduced from April‌‌‌ ‌‌2023 will also not go ahead.

Corporation Tax (CT) rise cancelled

The planned increase to the Corporation Tax main rate from 19% to 25% has been cancelled for firms with more than £250,000 profit. The main rate will now remain at 19% from 1‌‌‌ ‌‌April 2023.

From April 2023, the bank CT surcharge rate will stay at 8% and the allowance will be set at £100million.

Income tax lowered

From April 2023, the basic rate of income tax will lower from 20% to 19%.

NOTE: It was also announced that the 45p additional rate of income tax would be abolished, but this has change has since been cancelled.

Reversal of dividend tax rates

From April 2023, the 1.25% increase to dividend tax rates will be reversed.

AIA increase made permanent

The Annual Investment Allowance (AIA) will be kept at £1 million permanently, continuing to give 100% tax relief to businesses on their plant and machinery investments up to this amount.

This rate was previously raised from £200,000 as a temporary measure in January 2019 and was due to end in March 2023.

Introduction of new Investment Zones

New investment zones around the UK are to be introduced, where enhanced time-limited tax reliefs will be provided, including Stamp Duty Land Tax (SDLT), Enhanced Capital Allowances, Structures and Buildings Allowance and Employer National Insurance contributions.

Stamp Duty Land Tax (SDLT) changes

The SDLT threshold (the nil rate band) has doubled to £250,000 with immediate effect.

In addition to this:

The SDLT threshold for first-time buyers increases to £425,000.

The maximum value of a property on which first-time buyers’ relief can be claimed increases to £625,000

IR35 administration burden eased

From 6 April 2023, the 2017 and 2021 reforms to the Off-payroll Working Rules (also known as IR35) will be reversed. From this date, workers providing their services via an intermediary will once again be responsible for determining their employment status and paying the appropriate amount of tax and NICs.

Employee share schemes

From April 2023, the doubling of the Company Share Option Plan (CSOP) limit will allow businesses to offer employees share options worth up to £60,000.

Seed Enterprise Investment Scheme (SEIS)

From April 2023, the criteria of the Seed Enterprise Investment Scheme (SEIS) will be expanded, including allowing firms to raise £250,000 under the scheme.

 

Want to get our news updates and insights for business owners straight to your inbox? Sign up to receive our emails.