Mini Budget - Tax announcements

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Mini Budget - Tax announcements

Published 23 September 2022

The major news outlets will shortly be all over the headlines of the mini / emergency Budget which was first thing this morning.  Therefore in the interest of speed a bullet point summary of the tax headlines are as follows:

Already ‘leaked’

  • The health and social care levy will be abolished from 6 November (i.e. the 1.25% national insurance charge for employers and employees);
  • The equivalent dividend increase will be abolished from April 2023 (i.e. the 1.25% additional charge on dividends);
  • Corporation tax rates will stay at 19% and will not increase to 25% as announced with effect from April 2023.

New news

  • The additional rate of tax (45%) will be abolished from April 2023 (the top rate of income tax will therefore become 40%);
  • The basic rate of tax (20%) will go down to 19% from April 2023;
  • The most recent IR35 changes will be abolished from April 2023: this will take us back to the position before 2017; it will be the personal service company which must decide on employment status and pay any IR35 tax; from April 2023 the ultimate engager will not be responsible for paying the IR35 tax (even if the contractor is a deemed employee).  This will apply to the public and private sector;
  • As regards SDLT, the residential nil rate band will increase from £125,000 to £250,000 and for first time buyers the equivalent increases from £300,000 to £425,000;
  • From April 2023, the maximum value of shares under option pursuant to the CSOP regime will double from £30,000 to £60,000 with some helpful technical changes to the legislation;
  • The Annual Investment Allowance will remain at the £1 million level, and will not drop to £200,000 as previously announced from April 2023;
  • New geographic Investment Zones will be created which will benefit from tax incentives (e.g. SDLT, council tax and employer’s NIC).

Certain non-tax items were announced such as planning reform, abolishing the bankers’ bonus cap and some changes to the rules around strike action.

Items not mentioned

  • In the Autumn of 2020, the Treasury launched a consultation relating to the VAT recovery position of central government including NHS Trusts.  The sub-text of that consultation was to simplify the VAT recovery position so that it would no longer be necessary to consider the type of service on which the VAT cost arose.  Instead there would be an across the board VAT recovery (copying the local authority VAT position).  No announcement was made today; in practice this is a change which will take quite a bit of thinking through as to the funding of these bodies.  Possibly one too tricky to deal with right now at the same time as everything else happening in this area.
  • No changes to the Employee Ownership Trust conditions despite pressure from certain tax bodies to tighten the rules.  This ensures EOTs remain a fantastic tax free alternative to selling to trade or private equity. 

Authors

John Dunlop

John Dunlop

London - Walbrook

+44 (0)20 7894 6330

Omar Asfar

Omar Asfar

London - Walbrook

+44 (0) 20 7894 6059

Michael McCormack

Michael McCormack

London - Walbrook

+44 (0) 20 7894 6328

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