On 17th October 2022, Chancellor Jeremy Hunt made a series of changes to the Mini-Budget announced in the previous month.
The changes reversed many of the proposed plans put forward in the mini-budget announced just a few weeks prior.
We’ve summarised the important changes and how they can affect you:
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It was initially announced that the 45% additional rate of tax would be abolished. However, this decision was reversed shortly after. Those earning over £150,000 a year will still be applicable for the 45% rate of income tax going forwards.
The government has now announced that the planned reforms to the basic rate of income tax have been reversed as well. The basic rate of income tax will now remain at 20% for the foreseeable future, rather than 19%.
The dividend tax rate will increase by 1.25% in April 2023 after being provisionally reversed in the mini-budget just a few weeks ago.
By 2023, ordinary and upper rates will increase to 8.25% and 33.75% respectively.
The government had planned on reforming the changes to the rules relating to off-payroll working, known as IR35 which were introduced in 2017 and 2021.
In their mini-budget a few weeks ago, the Government had planned on shifting the responsibility away from businesses being responsible in ensuring that the contractors they engage via another company were entitled to their self-employed status.
As per the Chancellor’s announcement, the planned changes have been scrapped and businesses will now continue to shoulder the responsibility in determining the working status of the contractors they engage.
The changes made to stamp duty in the initial mini-budget will still apply. Stamp duty will continue to only apply on purchases of properties exceeding £250,000. First-time buyers will only pay tax on properties costing more than £425,000. First time buyers will take advantage of discounted stamp duty up to £625,000.
National insurance changes planned in the mini-budget will also proceed as planned, with the 1.25% rise to be cancelled on 6th November.
The initial mini-budget had planned for a cancellation of the UK-wide rise in corporation tax in April 2023. Prior to the chancellor’s announcement, the PM had decided to U-Turn on this and confirmed that the rise in corporation tax would indeed take place. From April 2023, the rate will rise from 19% to 25%
We expect there to be more changes announced in the official Autumn budget in a couple of weeks. If you have any questions on how this may affect you please do not hesitate to get in touch.