Prepared by the PEM Tax team after the Chancellor’s Mini Budget U-turn on 17 October 2022.
What tax measures announced in the Mini Budget are to remain?
National Insurance Contributions
The temporary 1.25% rise in National Insurance Contributions will still be removed from 6 November 2022 and the introduction of the 1.25% Health & Social Care Levy in April 2023 will still not go ahead.
Stamp Duty Land Tax
The Stamp Duty Land Tax nil rate band for residential purchases will remain at £250,000 after being increased on 23 September 2022. The rates for First Time Buyers’ relief as increased on 23 September 2022 will also remain at these higher levels.
Seed Enterprise Investment Scheme and Company Share Option Plans
The proposed changes to increase the limits under the Seed Enterprise Investment Scheme and the Company Share Option Plan are expected to continue as part of the Government’s desire to support business investment.
What tax measures announced in the Mini Budget are being reversed?
Basic rate of income tax
The plan to reduce the basic rate of income tax from 20% to 19% from April 2023 has been scrapped. The rate will remain at 20% until economic circumstances allow it to be cut.
Dividend tax rate
The government will no longer cut the dividend tax rates and will maintain the 1.25% increase. It is therefore back to where we started with the basic rate, higher rate and additional dividend tax rates remaining at 8.75%, 33.75% and 39.35% respectively.
The proposed increase to 25% for the main rate of corporation tax from April 2023 which was previously scrapped, will now go ahead.
The previously announced 19% small profits rate of corporation tax will also be maintained for companies with profits of less than £50,000. The rate will be tapered up for businesses as they get closer to the £250,000, the profit level for which companies will be taxed at the main rate of 25%.
If a company has one or more associated companies, or shorter accounting periods these limits will be apportioned accordingly.
The Government are no longer removing the Off-Payroll Working (OPW) rules from April 2023. The current OPW rules introduced into the Public Sector in April 2017 and into the Private Sector in April 2021 for medium and large engagers will continue to apply.
VAT free shopping and alcohol duty freeze
The planned VAT free shopping scheme for non UK shoppers to Great Britain has been cancelled. Further details will follow “shortly” on how alcohol duty rates will change.