Posted October 17, 2022

Interim Mini Budget

On Friday Jeremy Hunt was appointed the new Chancellor, this morning he made his first official statement as Chancellor where he reversed almost all the tax cuts announced in the mini budget. I have summarised below the changes he announced, there will be a fiscal plan delivered on 31 October 2022 which we will also summarise for your reference.

Corporation Tax

The rate of corporation tax will now not be kept at 19%, the increase announced in the March 2021 budget will go ahead in April 2023.

To recap from April 2023 the rates will be:

• The main rate of Corporation Tax will be 25% for Companies with profits of £250,000 or more – this applies to all profits
• A Small Profits Rate of 19% will exist for Companies with profits of £50,000 or less
• The main rate will taper in between £50,000 and £250,000

The taper will give an effective rate of corporation tax of 26.5% on profits between £50,000 and £250,000. There are more rules around these, including the bands being split across companies if there are associated companies, if you want to know how this will affect your company, please get in touch with your client manager.

Dividend Tax

There will be no reduction to the rate of dividend tax, the rates will remain at 8.25% (basic rate) 33.75% (higher rate) 39.35% (additional rate).

Basic Rate Tax

The reduction in the basic rate of income tax to 19% will now no longer go ahead, the basic rate of income tax will remain at 20% indefinitely.

Additional Rate Tax

The additional rate of tax will no longer be abolished, the additional rate of tax is 45% on income and 39.35% on dividends.

IR35

The planned changes to IR35 will no longer go ahead, this means that the entity engaging the contractor will remain responsible for applying the correct tax treatment and assessing the employment status of the contractor.

VAT Free Shopping for International Tourists

This scheme will no longer go ahead.

Alcohol Duty

The freezing of alcohol duties will be scrapped, the next steps of the Alcohol Duty Review announced in April 2022 will continue as set out in that budget.

Support with Energy Bills

The support for energy bills announced in the mini budget will now last until April 2023, in April 2023 further support will be announced but this will be targeted towards businesses and households in most need.

National Insurance

The legislation for the change to employee and employer NIC has already gone through Parliament and therefore these will still be reduced from 6 November the rate of Class 1, Class 1A, Class 1B and Class 4 NIC will reduce by 1.25%. If we process your payroll, we will ensure that this is processed automatically. The threshold at which employees, employers and the self-employed pay NI remain unchanged.

If you have any queries about any of the above or how the tax changes may affect you, please do not hesitate to get in touch.