Posted: 17 / 10 / 2022
Image: Posted by: HM Treasury and The Rt Hon Jeremy Hunt MP. Photographer: Andrew Parsons, OGL 3, via Wikimedia Commons
What’s changed from Kwasi Kwarteng’s Mini Budget?
On Monday 17th October, the new chancellor, Jeremy Hunt, cancelled almost all of the tax announcements from the Mini Budget.
In his statement, the Chancellor confirmed that the following policies will NO LONGER be taken forward…
- Cutting the basic rate of income tax to 19% from April 2023. While the Government aims to proceed with the cut in due course, this will only take place when economic conditions allow for it and a change is affordable. The basic rate of income tax will therefore remain at 20% indefinitely.
- Cutting dividends tax by 1.25 percentage points from April 2023. The 1.25 percentage points increase, which took effect in April 2022, will now remain in place. For clarity, the dividend rates from April 2023 will be:
- First £2k of dividends 0%
- 8.75% on dividends falling in the basic rate band (<£50,270)
- 33.75% on dividends falling in the higher rate band (between £50,270 & £150k)
- 39.35% on dividends falling in the additional rate band (£150k+)
“Note that the National Insurance cut has stayed so it’s interesting that the Government has taken this approach to dividends. The 1.25% increase on the dividend rate was supposedly introduced to mirror the 1.25% rise in NIC to ensure that those paying themselves dividends instead of salary would also see a tax rise.
There is now no incentive for clients to delay the timing of dividends into 23/24 tax year.”
- Repealing the 2017 and 2021 reforms to the off-payroll working rules (also known as IR35) from April 2023. The reforms will now remain in place, i.e. the obligation for assessing whether a contract falls within IR35 will remain with the engager as opposed to the worker.
- The Energy Price Guarantee will now only be in place until April 2023 and not for the two years from October 2022 as originally announced. As a recap, the Energy Price Guarantee will cap the unit price that consumers pay for gas & electricity. The Government have said that this will mean the average household will pay no more than £2,500 pa for the next six months. This is in addition to the £400 support that all households are due to receive over the coming months
- Introducing a new VAT-free shopping scheme for non-UK visitors to Great Britain will no longer happen.
- Freezing alcohol duty rates from 1 February 2023 for a year will also no longer happen.
The above are all in addition to the previously announced U-Turns regarding corporation tax (now going to 25% April 2023) and the additional rate of income tax (staying at 45% for income over £150k).
What’s still going ahead from the Mini Budget?
The following remains in place from Kwasi Kwarteng’s original announcement…
- Reversing the 1.25% NIC rise
- Annual Investment Allowance will remain at £1 million (it was due to reduce to £200k in April 2023)
- 130% Super Deduction will still end 31 March 2023
- Investment zones still going ahead
- SDLT changes still going ahead (information below)
STAMP DUTY LAND TAX
Good news for anyone buying a property (particularly if you’re a first-time buyer).
- Threshold at which start to pay SDLT increased to £250,000 from £125,000 from today (23 Sep)
- First time buyer exemption threshold increased to £425,000 from £300,000 from today (23 Sep)
- First time buyer property value limit increased to £625,000 from £500,000 from today (23 Sep)
- No mention of changes to the additional 3% for people with second homes
The rates for SDLT will therefore be (for someone with a single property):
|RELEVANT CONSIDERATION||% (SINGLE PROPERTY)||% (MULTIPLE PROPERTIES)|
|Up to £250.000||Nil||3%|
|The next £675.000 (the portion from £250.001 to £925.000)||5%||8%|
|The next £575.000 (the portion from £925.001 to £1.5 million)||10%||13%|
|The remaining amount (the portion above £1.5 million)||12%||15%|