The Chancellor of the Exchequer, Kwasi Kwarteng, delivered his Budget Statement this morning, lots of big changes to income tax, NIC, SDLT and corporate tax, many of which were unexpected.?Key points as follows:
- ?The government will bring forward the 1 percentage point cut to the basic rate of income tax to April 2023, 12 months earlier than planned. This will apply to the basic rate of non-savings, savings, non-dividend income.
- ?The additional rate of income tax will also be removed from April 2023. This will apply to the additional rate of non-savings, savings, non-dividend and dividend income. As the additional rate of income tax will be removed current additional rate taxpayers will also benefit from the Personal Savings Allowance of ￡500 for higher rate taxpayers.
- ?The government is reducing Class 1 (employers and employees) and Class 4 National Insurance contributions (NICs) by 1.25 percentage points from November and cancelling the introduction of the Health and Social Care Levy as a separate tax from April 2023.
- ?The government is reversing the 1.25 percentage point increase in dividend tax rates applying UK-wide from 6 April 2023. Alongside the reversal of the Health and Social Care Levy, the ordinary and upper rates of dividend tax will be reduced to 2021-22 levels of 7.5% and 32.5% respectively. Due to the abolition of the additional rate of income tax, income that was previously charged at the additional rate, will now be charged at the upper rate of 32.5%.
- ?A four-year transition period for Gift Aid relief will apply, to maintain the income tax basic rate relief at 20% until April 2027. There will also be one-year transitional period for Relief at Source (RAS) pension schemes to permit them to continue to claim tax relief at 20%.
- ?The previously announced planned increase in the UK Corporation Tax rate from 19% to 25% that was due to take effect in April 2023 will not go ahead. Companies will continue to pay 19% on their taxable profits.
- ?From today (23 September 2022), the government will increase the threshold above which Stamp Duty Land Tax (SDLT) must be paid on the purchase of residential properties in England and Northern Ireland from ￡125,000 to ￡250,000. There will also be an increase in the relief that first-time buyers can receive. The threshold at which first-time buyers begin to pay residential SDLT will increase from ￡300,000 to ￡425,000, and the maximum value of a property on which first-time buyers relief can be claimed will also increase, from ￡500,000 to ￡625,000.
- ?Seed Enterprise Investment Scheme (SEIS) – From April 2023, companies will be able to raise up to ￡250,000 of SEIS investment, a two-thirds increase. To enable more companies to use SEIS, the gross asset limit will be increased to ￡350,000 and the age limit from 2 to 3 years. To support these increases, the annual investor limit will be doubled to ￡200,000.
- ?Company Share Option Plan (CSOP) – From April 2023, qualifying companies will be able to issue up to ￡60,000 of CSOP options to employees, double the current ￡30,000 limit.
- ?The current limit for the Capital Allowances Annual investment allowance is to remain at ￡1million from 2023 when it was due to be substantially reduced.
- ?The off-payroll rules, which a caused significant burden for bigger business, are to be scrapped from 2023 meaning that the responsibility for the operation of the deemed employment rules will revert to the relevant intermediary entity in all contractual chains.
- The Government will abolish the Office of Tax Simplification and set a mandate to the Treasury and HMRC to focus on simplifying the tax code.
