Overview
Tax Manager Bernard Critchley offers much needed clarification on the recent mini-budget and subsequent changes made.
The current proposed tax changes
Following the reversal of many of the proposals in the original “mini-budget” of 23 September, here is a breakdown of the current changes (which may be amended further on 31 October 2022 or in the Spring statement).
For individuals
The following personal tax measures are staying put:
- The basic rate of income tax will be set at 20% indefinitely, or until economic circumstances allow for a cut.
- The health and social care levy will not be introduced as planned from April 2023.
- Dividend tax will not be cut by 1.25 percentage points from April 2023, so those tax rises on dividend income which came in from 6 April 2022, will remain in place.
- The additional rate of income tax is fixed at 45%.
Business taxes
- A rise in the main rate of corporation tax from 19% to 25% will take effect from 1 April 2023.
- This rate increase also introduces a complex marginal tax rate for companies with profits between £50,000 and £250,000. Companies with profits of under £50,000 per year will continue to pay corporation tax at 19%, as the legislation stands today.
- The cap on the annual investment allowance (AIA) would be permanently set at £1m per year.
- There was no information about the super deductions of 130% for new plant and machinery, or 50% for new integral features, which are due to cease on 31 March 2023.
- There has been no information about the number or scope of the proposed enterprise zones.
Land taxes
The changes in stamp duty land tax (SDLT) were not reversed by Hunt, as they came into effect immediately for residential property completions made on and after 23 September 2022.
The Welsh government made a similar move to increase its Land Transaction Tax (LTT) starting threshold for residential properties to £225,000 from 10 October 2022.
The Scottish government did not make any changes and held its land and buildings transaction tax (LBTT) rates and thresholds steady.
Need more information?
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