Hawkins & Co’s quick overview of changes that will impact both large and small UK businesses in the up and coming months.
As you are probably aware, the Chancellor of the Exchequer, the Rt Hon Kwasi Kwarteng MP announced the mini-Budget last Friday. The changes will impact both large and small businesses in the upcoming months so here’s a round up of the key points:
The government announced that the Health and Social Care Levy (HSCL) of 1.25% due to be introduced from April 2023 will now not go ahead – and that the 1.25 percentage point uplift in National Insurance contributions (NICs) rates that was introduced in April 2022 will end on 6 November 2022. HMRC has emailed software providers, employers and agents to make them aware of these changes.
Income Tax reduction
The Government will cut the basic rate of income tax to 19% from April 2023 bringing forward the 1 percentage point cut to the basic rate of Income Tax and abolishing the additional rates of Income Tax – accompanied by changes to the dividend tax rate.
Meanwhile, the 45% additional rate of income tax will be scrapped for England, Wales and Northern Ireland taxpayers (Different rates and thresholds for Scotland). Instead there will be one single higher rate of income tax of 40% from April next year. How will this affect you? This may impact your business, especially if you have employees on the payroll.
Corporation tax increase scrapped
The former Chancellor announced an increase in the main rate of Corporation tax, rising from 19% to 25% in April 2023. This tax increase has now been cancelled.
More updates in the Business Sector you may find useful to know:
- The IR35 reforms of 2017 and 2021 will be repealed on 6 April 2023 – This means Agency workers (Contractors) providing their services via an intermediary will once again be responsible for determining their employment status, and paying the appropriate amount of tax and National Insurance contributions;
- An expansion of the Seed Enterprise Investment Scheme (SEIS) to help more UK start-ups raise higher levels of finance – doubling the annual investor limit to £200,000, increasing the gross asset limit to £350,000 and making it easier for investors to claim tax reliefs, due to come into force from 6 April 2023;
- The amount of shares that can be optioned to employees under the Company Share Option Plan (CSOP) has been doubled from £30,000 to £60,000 and removing a condition which limits the types of shares eligible for inclusion within the scheme. This increase will be introduced from April 2023;
- Changes to Stamp Duty Land Tax (SDLT), including doubling the nil-rate threshold from £125,000 to £250,000, increasing the level at which first-time buyers start paying SDLT from £300,000 to £425,000 and allowing first-time buyers to access this relief on property purchases up to £625,000;
- The cancellation of the planned increase in the rate of Diverted Profits Tax from 25% to 31% and the planned reduction in the Corporate Tax surcharge rate for banking companies, both of which had been due to take effect from 1 April 2023;
- The repeal of reforms to the Off-Payroll Working (OPW) rules introduced in the public sector in 2017 and extended to medium and large-sized organisations in the private and voluntary sectors in 2021 – with workers providing their services via an intermediary once again responsible for determining their employment status and paying the correct amount of tax and National Insurance contributions from 6 April 2023;
- A freeze on Alcohol Duty rates from 1 February 2023, and further details of the government’s reforms to alcohol taxation;
- Confirmation that the Annual Investment Allowance (AIA) will be set at £1 million permanently, originally raised from £200,000 as a temporary measure in January 2019 (and due to end in March 2023); and
- The introduction of new investment zones around the UK where enhanced tax reliefs will be offered for Stamp Duty Land Tax (SDLT), Enhanced Capital Allowances, Structures and Buildings Allowance and Employer National Insurance contributions.
If you have any questions about how and if this affects your business, please do not hesitate to give us a call and one of the team will be happy to help you. Call us on 01279 812 277 or email us at firstname.lastname@example.org.
Be fully informed by the Team @ Hawkins & Co.