Please note that following the publishing of this blog, the Mini-Budget 2022 was later updated and changed by the new Chancellor of the Exchequer, Jeremy Hunt. Please see our updated blog posted on the 18th October 2022 for details of the changes.
The Chancellor of the Exchequer, Kwasi Kwarteng, has announced in the ‘Growth Plan 2022’ numerous tax and national insurance contributions (“NICs”) changes in light of economic pressure in the UK. A copy of the full document can be found
here.
These are the key highlights from the Mini-Budget:
Income Tax and NICs
- From April 2023, the basic rate of income tax will be cut from 20% to 19%. (this has been updated - please see updated blog)
- There will be a four-year transition period to April 2027 for Gift Aid to claim income tax basic rate relief at 20%. (please see updated blog)
- There will be a one-year transition period for Relief at Source pensions schemes to permit them to claim the 20% basic tax relief. (please see updated blog).
- From April 2023, the additional rate band of 45% for earners over £150,000 will be removed. This will allow the Personal Savings Allowance to available for these earners for their savings income when it was not previously available (in this case, £500). (this has been updated - please see updated blog)
- From April 2023, the government will reverse the 1.25% increase in dividend rates (this has been updated - please see updated blog).
- 1.25% increase in National Insurance is to be reversed from November 2022 and Health and Social Care Levy is to be cancelled.
Stamp Duty Land Tax (“SDLT”)
- From 23 September 2022, first-time buyers will not need to pay SDLT on residential homes worth not more than £425,000 (this is an increase from £300,000). The government will also be increasing the maximum property purchase price for first-time buyers to £625,000 (up from £500,000).
- From 23 September 2022, the SDLT threshold for residential home buyers will increase from £125,000 to £250,000.
Corporation Tax
- The planned rise on Corporation Tax from 19% to 25% is to be cancelled. (this has been updated - please see updated blog)
- The government will make the temporary £1 million level of Annual Investment allowance permanent which was due to expire after 31 March 2022. Previously, AIA was set at £200,000 but has been subject to this temporary uplift for some time.
VAT
- A new VAT-free digital shopping scheme will be introduced which will allow non-UK visitors to Great Britain to obtain VAT refunds on goods bought in the high street and other departure points and exported from the UK in their personal baggage. (this has been updated - please see updated blog)
Changes to Off-Payroll Working (IR35)
Previously, from 6 April 2021, different rules applied for IR35 intermediaries legislation if the client was either ‘small’ or ‘large’. Where the client was ‘small’, it was the responsibility of the worker to determine whether or not these rules apply. However, where the client was ‘medium/large’, it was the client’s responsibility for deciding whether or not IR35 was applicable and determine the workers employment status.
(this has been updated - please see updated blog)
From 6 April 2023, workers providing their services via an intermediary (such as a personal services company), will be responsible for determining their employment status and paying the correct tax due. (
this has been updated -please see updated blog)
Employee Share Schemes and Seed Enterprise Investment Scheme (SEIS) Changes
- Company Share Option Scheme ("CSOP")
Tax-advantaged employee share schemes are often used as a performance incentive and for the retention of key members of staff. Under a CSOP, the employer can grant an option to an employee the right to buy shares in the company for a fixed price at a timeframe in the future.
For the employee, there are generally no income tax or national insurance implications when granted but there can be some tax and NICs implications depending on when the shares are exercised from the date of grant.
From April 2023, the qualifying companies will be able to issue up to £60,000 of CSOP options to employees (up from the £30,000 limit).
- Seed Enterprise Investment Scheme ("SEIS")
SEIS were introduced by the UK government on 6 April 2012 to assist start-up companies gain equity finance. This is achieved by investors buying shares in the company.
Investors who invest in SEIS can obtain income tax relief through a tax reducer at a flat rate of 50%. The previous limit for relief was the lower of the amount subscribed for and £100,000. However, the mini-budget announcements mean that from April 2023, this will increase to £200,000.
From April 2023, companies will be able to raise up to £250,000 (from £150,000). The gross asset limit will also increase to £350,000.
There is an age limit for SEIS shares which states that a company who wishes to issue these SEIS shares must have commenced its trade less than two years before the SEIS are issued. However, from the Mini-Budget announcements, from April 2023, this will increase to three years.
Please
contact a member of our
team if you have any questions on the Mini-Budget.
Disclaimer: This article is for general information only and is not intended to constitute individual advice. It is recommended that you seek independent tax advice with regards to the changes made in the mini-budget.
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