Mini Budget Update
A week is reputedly a long time in politics, and the past week has proved the case!
Jeremy Hunt has been appointed as Chancellor and he’s wasted no time in implementing a near-total reversal of the Mini Budget, announced by his predecessor Kwasi Kwarteng on the 23rd September.
The goal of this emergency statement by the new Chancellor, within days of his appointment, was to stabilise the financial markets, which had reacted badly to the ‘unaffordable’ tax cuts from the Mini Budget.
This post is to summarise the outcomes of the various announcements, and provide some clarity to clients and contacts.
If you’d like to download an updated summary, you can do that by scrolling down to the button below.
- The Basic rate of Income Tax will remain at 20% for earnings between £12,571 and £50,270 for people in England, Wales and Northern Ireland.
- The top tier of Income Tax will remain in place, at 45% for earnings over £150,000.
- Corporation Tax will increase from 19% to 25%, for companies with profits over £250,000, in April 2023.
- This does NOT affect companies with profits below £50,000, who will pay the same rate of Corporation Tax as today, 19%.
- Companies with profits between £50,000 and £250,000 will pay Corporation Tax on sliding rates. Only those beyond £250,000 will pay the full amount.
- National Insurance contribution rates will be reduced by 1.25% from 6th November 2022.
- This removes the increase that was due to become the Health and Social Care Levy, which will now not be introduced.
- All dividend tax rates were increased in April 2022 by 1.25%, aimed at ensuring the that earned their income from dividends paid their share of the incoming Health and Social Care levy.
- These rates are NOT being reduced as National Insurance rates are reduced in November 2022, and remain as follows:
- Basic rate – 8.75%
- Higher rate – 33.75%
- Additional rate – 39.35%
- No stamp duty is due for the first £250,000 of a property’s value.
- First time buyers pay no stamp duty on the first £425,000 of a property’s value.
The promised changes to off-payroll working regulations have been withdrawn, so the rules that require employing businesses to ensure the correct handling of contractors, remain unchanged.
The two year Energy Price Guarantee will only run until April 2023. During this time, a Treasury-led review will look at means tested options for households and businesses.
Limits to bonuses have been removed, allowing them to exceed the previous limit of twice the amount of any fixed salary.
There has been a huge amount of change since the Mini-Budget, so it’s understandable if you’ve lost track of what has changed, what’s moved back, and what’s still going to happen! If you’re unsure, please get in touch and we’ll clarify things for you.
(This has been updated to include the further changes announced by ex-Chancellor Kwasi Kwarteng on the 3rd October 2022 and again to include announcements by new Chancellor Jeremy Hunt on the 17th October 2022.)
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We’re obviously not entirely sure that this is an end to the various announcements and changes. Indeed it’s not entirely clear whether we’ll have a new Prime Minister again very soon!
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