Mini-Budget: Major Blow

by | 4 October 2022

In all my years as a tax adviser, I have never witnessed significant tax changes announced in such an informal manner. The market’s reaction and subsequent reversal of a minor element of the “mini-budget” was inevitable. Once the OBR forecast is published and autumn progresses, only time will tell whether the remaining announcements make it to the Finance Bill or indeed are passed by Parliament, with Conservative votes not guaranteed.

What do we know?
  • The temporary National Insurance rise introduced in April will reduce from 6 November 2022 for the remainder of the tax year.
  • The 1.25% Health and Social Care Levy will not come into force in April 2023.
  • Stamp Duty Land Tax (SDLT) will not be payable on the first £250,000 of a residential property, for individuals who own only one property.
  • First-time buyers will not pay SDLT on the first £425,000 for residential properties valued below £625,000.
  • The 20% basic rate of income tax will reduce to 19% from April 2023.
  • The 1.25 percentage point increase in the dividend tax rate introduced in April 2022 will reverse in April 2023.
  • The planned increase in Corporation Tax from April 2023 will not take effect; it will remain at 19%.
  • The £1m Annual Investment Allowance due to reduce to £200,000 from April 2023 will now remain at its current level.
  • The relatively new and extended IR35 (contractor) provisions introduced for the public sector and medium/large companies in the private sector will be repealed.
  • New Investment Zones attracting a multitude of tax benefits will proceed. In the South-West of England these are Newquay Airport, Falmouth Docks, Plymouth, Gravity, and sites near Weymouth.
  • The HMRC approved employee share scheme, CSOP, will increase the option value to £60,000 from April next year.
  • SEIS thresholds will increase from April 2023: fundraising to increase to £250,000, the gross asset limit to increase to £350,000, the investor limit increasing to £200,000, and the company’s age limit to 3 years.
  • Government intends to extend the EIS and VCT tax regimes beyond the 2025 sunset clause.

Whilst uncertainty dominates the economic picture, nothing is guaranteed until legislated for by Parliament.

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