Mini-Budget 2022 - the new Chancellor’s update
Susie Walker
Partner and Head of Tax
If these past few weeks have taught us anything, they've taught us that tax is anything but boring! Indeed, we've seen directly the impact tax changes can have on our economy, and how quickly this impact can take effect.
This morning the new Chancellor, Jeremy Hunt, reversed almost all of the tax cuts that had been announced in the mini-Budget on 23 September 2022 in an attempt to help stabilise the UK economy.
The measures scrapped are:
- The proposed Basic Rate of Income Tax (BRIT) reduction for those in England, Wales and Northern Ireland of 1% from 6 April 2023. BRIT will now remain at 20% indefinitely. This does not impact those subject to the Scottish Rate of Income Tax.
- Dividend tax will not be reducing back to the pre-April 2022 rates in April 2023, remaining at 8.75% (basic rate), 33.75% (higher rate) and 39.35% (additional rate).
- The proposed VAT free shopping scheme for overseas visitors.
- The freeze on alcohol duty rates.
The proposed reforms for Off Payroll Workers that had been introduced in 2017 and 2021 will now go ahead.
U-turns previously announced
The Government had already done a U-turn on the scheduled corporation tax rate change planned for April 2023. The main rate of corporation tax will now increase from 19% to 25% from 1 April 2023 as originally planned. Additionally, the 45% income tax rate for higher earners will remain in place, with the mini Budget announcement of a reduction shelved on 3 October 2022.
Other key announcements
Today’s announcement further confirmed the abolition of the Health & Social Care Levy and that the Stamp Duty changes will remain in place. The Chancellor has also scaled back the energy bills support scheme which will now end in April 2023, rather than being in place for two years as previously announced. Thereafter there will be targeted support for the most in need.
Measures kept
The following measures, to help investment and growth for businesses, will be kept as originally announced during the mini-Budget:
- The £1 million Annual Investment Allowance will remain as the permanent level for this allowance
- The Seed Enterprise Investment Scheme and the Company Share Options Plan changes will go ahead as announced
Where we are - a snapshot overview
As a handy summary, the key tax measures, and the current state of these, are set out as in our snapshot table below. Further detail will be added, as soon as we receive more detail.
| Measure | Status |
|---|---|
| Reduction in the main rate of income tax from 20% to 19% from 6 April 2023 | Reversed – the main rate will remain at 20% indefinitely |
| Removal of the additional rate of income tax from 6 April 2023 | Reversed – as announced on 3 October. The 45% rate remains. |
| Reduction in dividend tax rates by 1.25% from 6 April 2023 | Reversed. The dividend tax rate for individuals will remain at 39.35%. |
| Reduction in NIC rates from 6 November 2022 | Kept |
| Cancellation of the health and social care levy due to come into effect from 6 April 2023 | Kept |
| Increase in the nil-rate threshold for Stamp Duty Land Tax on residential property in England & Wales | Kept |
| Increase in the thresholds for Stamp Duty Land Tax first-time buyer’s relief in England & Wales | Kept |
| Repeal of the off-payroll working rules introduced in 2017 and 2021 | Reversed – the off-payroll working rules will remain in place |
| Cancellation of the plan to increase the main rate of corporation tax to 25% | Reversed – it was announced on 14 October that the main rate of corporation tax will increase to 25% from 1 April 2023 |
| Annual investment allowance to be set at a permanent level of £1 million | Kept |
| Introduction of investment zones in which various tax incentives are intended to be available | Kept |
| Extension of enterprise investment scheme and venture capital trusts past 2025 | Kept |
| Increase in the limits to the seed enterprise investment scheme | Kept |
| Increase in the limit to the value of options that can be granted under a company share option plan | Kept |
| Introduction of a new digital scheme to allow for VAT-free shopping by visitors to the UK | Reversed |
| Abolition of the Office of Tax Simplification | Kept |
Get in touch
This update by the Chancellor this morning has seen the markets responding positively. We hope that after a turbulent few weeks, calmer times are ahead for businesses, giving reassurance to plan and much needed certainty too.
If you have any questions about the impact of these changes on your business, please contact me, Susie Walker or your usual Johnston Carmichael adviser.
