On 23 September 2022 the Chancellor of the Exchequer Kwasi Kwarteng announced a set of new economic policies. The policies were not a budget statement although the media has referred to them as a “Mini Budget”. We are still awaiting another Autumn Statement in November 2022.

The main policies announced are as follows:

National Insurance

As of 06 November 2022 Employees and Employers NI will revert to the pre 06 July 2022 percentages. The thresholds will not alter. This means that for the first time in living memory the UK will have had 3 periods of differing National Insurance:

Health and Social Care Levy

Due to be introduced from 06.04.2023 the 1.25% Health and Social Care Levy has been cancelled. The change is expected to be approved by the House of Lords on 17 October 2022.

Income Tax

The basic rate of income tax will be reduced from 20% to 19% from April 2023. This is a year earlier than originally pledged by the previous Chancellor, Rishi Sunak, in the Spring Statement.

There will be a four year transition period for Gift Aid relief which will remain at 20% until April 2027. Pension schemes offering relief at source will also benefit from a one-year transition period during which tax relief can still be claimed at 20%.

Initially the additional income tax rate of 45% was to be abolished as at 06.04.2023. The change has now been withdrawn and the 45% rate remains unchanged.

Dividend Tax

Dividend tax rates for 2023/24 will also fall by 1.25% reverting to the pre-2022/23 levels. From April 2023 tax on dividends above the £2,000 dividend allowance will return to:

Basic Rate: 7.5%

Higher Rate: 32.5%

Additional Rate: 38.1%

It may, therefore, be tax efficient to delay receiving some dividend income until 2023/24.  

Off–Payroll Working

The Off-Payroll Working administrative rules have been repealed. As of 06.04.2023 workers providing their services via an intermediary such as a Personal Service Company (PSC) will once again be responsible for determining their own employment status.

Corporation Tax

The 01.04.2023 increase of corporation tax to 25% has been cancelled. The corporation tax rate will remain at 19%. 

Annual Investment Allowance

The Annual Investment Allowance expenditure limit was scheduled to decrease to £200,000 at 01 April 2023. The decrease has been cancelled and the expenditure limit of £1million will remain.

VAT

VAT free shopping has been reintroduced for overseas visitors.

Stamp Duty Land Tax (SDLT)

The Stamp Duty Threshold above which SDLT must be paid when purchasing a residential property has been increased from £125,000 to £250,000 with immediate effect.

The threshold at which first time buyers begin to pay SDLT on residential property has been increased from £300,000 to £425,000.

The maximum value on which first-time buyers relief can be claimed is increased from £500,000 to £625,000.

Note these changes apply to SDLT in England and Northern Ireland. Wales and Scotland have Land Transaction Tax and Land and Buildings Transaction Tax respectively.

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