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UK Fiscal Event – September 2022

The Chancellor announced his new Growth Plan on Friday 23rd September 2022.

Highlights:

  • Basic rate Income Tax has been reduced to 19% from 20% and the 45% band will be abolished
  • Corporation Tax will remain at 19% and will not increase to 25%, as was previously planned
  • Both the employers’ and the employees’ National insurance rates will be reduced by 1.25%
  • Stamp Duty Land Tax is abolished for first time buyers (up to £425k) and for other buyers (up to £250k). There is no SDLT for tax on commercial properties

You can read about it here: https://www.gov.uk/government/news/chancellor-announces-new-growth-plan-with-biggest-package-of-tax-cuts-in-generations

DECREASE IN BASIC RATE INCOME TAX

The basic rate Income Tax will reduce from 20% to 19%. This will be effective from 6th April 2023, instead of 6th April 2024.

ABOLITION OF 45% TAX RATE

The “additional rate” band will be abolished, meaning that earnings over £150,000 will be taxed at 40% rather than at 45%.  This will be effective from 6th April 2023.

DECREASE IN DIVIDEND TAX RATE

The Top rate of Dividend Tax (currently 39.35%) will be abolished and the 8.75% basic rate and the 33.75% higher rate will be reduced to 7.5% and 32.5% respectively. This will be effective from 6th April 2023.

NATIONAL INSURANCE

The standard employers’ National Insurance rate will decrease to 13.8% from 15.05% and the standard employees’ National Insurance rate will decrease to 12% from 13.25%. The higher rate for employees will reduce to 2% from 3.25%. This will be effective from 6th November 2022.

BUSINESS AND CORPORATION TAX

The previously announced increase in the UK Corporation Tax rate from 19% to 25% that was due to take effect in April 2023 will be cancelled. All companies, regardless of their size, will continue to pay 19% on their taxable profits.

IR35 REFORM

The recent reforms to the off-payroll working rules (known as IR35) will be repealed, which means that it will be the sub-contractor, not the contractor that will be responsible for ensuring compliance with the rules. This will be effective from 6th April 2023.

£1 MILLION ANNUAL INVESTMENT ALLOWANCE EXTENDED

The temporary £1 million Annual Investment Allowance will be made permanent – it was scheduled to drop to £200,000 from 31 March 2023.

130% SUPER DEDUCTION MAINTAINED

The “super-deduction”, which enables 130% tax deductions on investments in qualifying plant and machinery will be retained.

SEED ENTERPRISE INVESTMENT SCHEME

Seed Enterprise Investment Scheme (SEIS) companies will be able to raise up to £250,000 of SEIS investment (up from £150,000). Also it will be available to larger and older companies (gross asset limit will be increased to £350,000 from £200,000 and the age limit for the company will be extended to 3 years, from 2 years). The amount that an investor can invest each year will be increased to £200,000, from £100,000. This will be effective from 6th April 2023.

COMPANY SHARE OPTION PLANS

Company Share Option Plans (CSOPs) can issue up to £60,000 of employee options (Up from £30,000).

STAMP DUTY LAND TAX MEASURES

Stamp Duty Land Tax (SDLT) rates on residential property have been reduced (with immediate effect) as follows:

  • First-time buyers – SDLT is not payable on the first £425,000 of the property’s purchase price (which must be £625,000 or less)
  • All other buyers – SDLT is not payable on the first £250,000 of the property’s purchase price.
  • Commercial properties – Full relief from SDLT for purchases of land and buildings for commercial purposes or land and buildings for new residential developments in newly designated ‘Investment Zones’

Other matters

There are various other matters, which are probably less important to our clients. Should you wish to discuss any of these matters, please call any member of our team.

The Chancellor announced his new Growth Plan on Friday […]

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