Last week Chancellor Kwasi Kwarteng delivered a statement announcing the new ‘mini budget’ and a new approach for a new era…
The not so mini-budget was announced on Friday, and it’s safe to say the news was delivered with a bang!
Although ‘mini’ in name, the budget will have a huge impact for the contracting industry - one we have been hoping would come for years.
The government are keen to simplify tax, embedding tax simplification into the government and HMRC. Due to this, they’ll be abolishing the Office of Tax Simplification.
But what is changing exactly? Let us tell you 👇
I’m sure you are all aware and have been affected by the current surge in energy prices. Families all over the country have been finding new ways to heat their homes as we approach the colder seasons…
However, the newly announced Energy Price Guarantee will cap the unit price for 2 years from October 2022 meaning the average household’s energy bills will be capped at a maximum of £2,500. This is in addition to the £400 support for households via the Energy Bills Support Scheme.
Similarly for struggling businesses, the Business Energy Bill Relief Scheme is a 6-month temporary scheme which provides discounts on wholesale gas and electricity prices to businesses who are unable to stay afloat during this crisis. This scheme will be applied to energy usage initially between the 1st October 2022 and 31st March 2023.
The Chancellor has also commissioned the OBR to produce a forecast to be published by the end of this calendar year. The government will provide an update on its position on the fiscal rules alongside the next forecast
As for businesses, the planned increase to the Corporation Tax rate from 19% to 25% in April 2023 will not go ahead, with the 19% tax on company profits staying.
In addition to this, the Annual Investment Allowance was previously going to fall to £200,000 in March 2023. However, this will now remain at £1,000,000 permanently going forward.
Furthermore, the 2017 (public sector) and 2020 (private sector) IR35 off-payrolling working rules are being repealed from 6th April 2023.
From this date, workers providing their services via an intermediary will once again be responsible for determining their employment status and paying the appropriate amount of tax and National Insurance contributions.
The Chancellor was keen to point out the government is supporting companies to raise money by increasing the availability of the Seed Enterprise Investment Scheme (SEIS) and Company Share Option Plan (CSOP).
There’s also potential support for the Enterprise Investment Scheme (EIS) and Venture Capital Trusts (VCT) in the future.
But it doesn’t stop there!
From April 2023, companies will be able to raise up to £250,000 of SEIS investment (previously £150,000).
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.
In order to drive higher growth, the government will help expand the supply side of the economy.
New Investment Zones will provide time-limited tax reliefs, and planning liberalisation to support employment, investment, and home ownership and wider support for the local economy.
So, we’ve covered how the new mini budget will impact the energy crisis and our businesses, but how will it affect our personal lives?
Well, the basic rate income tax rate will decrease to 19% from April 2023, a year earlier than planned. The additional rate of 45% will also be scrapped from April 2023, meaning the highest rate of income tax will be 40%.
Furthermore, the 1.25% increase in dividend tax rates which was brought in from April 2022 will be reversed as of April 2023, bringing the dividend tax rates back down to 7.5% (basic rate), 32.5% (higher rate). The additional rate of dividends at 38.1% will also be scrapped from April 2023.
It gets better!
From 6th November 2022, National insurance rates will be reduced by 1.25% and the 1.25% Health & Social Care Levy tax set to come in from April 2023 will not come into force.
On top of this, from 23rd September 2022, the threshold from which Stamp Duty Land Tax (SDLT) must be paid will be doubled to £250,000 for all home purchases.
The threshold at which first-time buyers begin to pay SDLT will also 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.
Finally, the government also will bring forward reforms to improve access to affordable, flexible childcare.
While the new mini budget may be a lot to wrap our heads around, it’s positive news and we’re here to help! If you have any questions of want to find out more about any of the above topics don’t hesitate to get in touch with us, we’re happy to help!
