After discussions with the Prime Minister, many of the measures put forward in the Mini Budget on 23rd September 2022 have been scrapped by the newest Chancellor, Jeremy Hunt. This blog will help guide you through all the changes and reversals that were announced on 17th October 2022 that impact the Mini Budget.
Here is what has been scrapped:
The corporation tax rate was due to stay at 19% in the new Mini Budget. However, after discussion the rate will not stay at 19% and will increase to 25% from 1 April 2023, as per the Spring Statement. This will only impact businesses with £250,000 of profits. This measure is set to raise around £32 billion every year.
The removal of the 45% top income tax rate for high earners has been scrapped, this means that the 45% top income tax rate band will remain. The basic rate of income tax was supposed to be cut by 1% to 19%, but this has been scrapped so, the basic rate of income tax will remain at 20% until the economic conditions allow it to be cut. This change is worth around £6 million per year.
In the new Mini Budget, the alcohol duty rates were being frozen, from 1st February 2023. Not going forward with this freeze is worth approximately £600 million per year. This alcohol rate freeze has been scrapped, which has caused upset with the brewers and pubs as the freeze would have saved the industry up to £300 million.
The notion of Tax-free shopping for non-UK visitors has been scrapped meaning that any visitors from outside the UK will no longer be able to do their shopping without paying tax. Not proceeding with this is worth around £2 billion per year.
The Chancellor has guaranteed support with the energy prices until April 2023.This was due to be for longer, but economic conditions have meant this has had to be restricted to April 2023 with a further assessment set to be made in the future.
The cut to dividend tax rates
The 1.25% increase which came into effect in April 2022 will remain in place. This is valued to save the country around £1 billion per year.
Off payroll working
Off payroll working plans are reverting to the original plan, Jeremy Hunt has reversed the move to abolish IR35 reform. This will save the country around £2 billion per year.
Here is what is being retained:
Reversing the 1.25% rise in national insurance has been retained, this will continue as previously planned.
The notion that there will be no duty on the first £250,000 of the property’s value will be going ahead and the stamp duty tax will not be applied to the first-time buyers for properties worth up to £425,000.
Company Share Option Plans
Employees would be allowed to hold options of up to £60,000 of shares, doubling the current £30,000 limit.
Reliefs and incentives for business investment, such as Seed Enterprise Investments Scheme (SEIS) and Enterprise Investment Scheme (EIS), have been retained.
It’s not surprising to find yourself in a confused state. Understanding the changes or the impact they will have on your business from one announcement is hard but twice over, it’s easy to get lost. At Purple Lime, we work with businesses of all shapes and sizes to not only understand the impact of tax changes but plan a strategy that allows them to take advantage of the rules to benefit their business without any stress. If you would like to know more, please get in touch by emailing firstname.lastname@example.org, or calling us on 01249 263 333.