Last week saw the new Chancellor’s Emergency Budget announcement.
Whilst billed as a mini budget, it certainly included some big changes impacting businesses and individuals. We’ve summarised the key points below. If you have any queries or would like to discuss how the budget announcement affects you, please contact us. We’re here to help.
To summarise, the major changes involved a reduction in the basic rate of income tax, a reversal of the planned increase in corporation tax and the removal of the highest rate (45%) of income tax. Alongside these changes, the 1.25% Health and Social Care Levy has ended.
For more details, read on …
Autumn Mini Budget – Key Announcements
Tax & National Insurance
- The 1.25% increase in NICs will be abolished from 6 November 2022. This means updating payroll software to reflect this change by the deadline. This reduction is extended to dividend income, however not until 2023/24 tax year.
- Basic rate income tax will drop to 19% (from 20%) from 2023/24, applying to non-dividend income.
- The UK’s 45% highest tax band for people who earn more than £150,000 per year has been abolished. This will now be 40% from April 2023.
- The planned increase in corporation tax will no longer be applied – the 19% rate is to be retained.
- IR35 rules governing ‘off-payroll’ working are to be simplified.
The extent of the tax reductions across various earning levels are:
| Earnings | National insurance cut from 6 Nov | 19% base rate & NI from 6 April |
| £20,000 | £38 | £167 |
| £40,000 | £142 | £617 |
| £60,000 | £247 | £969 |
| £100,000 | £455 | £1,469 |
| £200,000 | £976 | £5,220 |
Dividend tax rates are also affected:
| 2023 – 24 | 2022 – 23 | |
| Dividend nil rate | 0 | 0 |
| Dividend ordinary rate | 7.5% | 8.75% |
| Dividend upper rate | 32.5% | 33.75% |
| Dividend additional rate | – | £39.35% |
Company Share Option Plans
- From 6 April 2023, the maximum value of shares that can be held under option increases to £60,000 per individual (from current £30,000)
Stamp Duty
- The Stamp Duty threshold has increased from property sales value of £125,000 to £250,000 (or £425,000 for first time buyers, to a maximum house price under £625,000). This change was introduced with immediate effect.
The changes in Stamp Duty main residential rates are:
| Chargeable consideration | Rate from 23/09/2022 | Rate before 23/09/2022 |
| First £125,000 | 0% | 0% |
| Next £125,000 | 0% | 2% |
| Next £675,000 | 5% | 5% |
| Next £575,000 | 10% | 10% |
| Remainder over £1,500,000 | 12% | 12% |
Infrastructure & Investment Zones
- Plans will be made for 38 investment zones within 38 local areas in England.
- Planning rules to be reviewed and amended to remove EU regulations and speed up building.
- Incentives to be offered to encourage land to be released for housing and commercial use.
- Investment zones to offer incentives such as no business rates or stamp duty to encourage the development of thriving communities.
Consumer Items
- Planned increases in the duties on beer, for cider, for wine, and for spirits are cancelled.
- Limit on household energy bills to £2,500 per year.
- In England, there will be a limit to the total cost for care home accommodation and personal care to £86,000 over the course of their lifetime.
