While it’s been described as a ‘mini-budget’, it’s fair to say that Chancellor Kwasi Kwarteng has packed in a lot of wide-ranging changes. Its stated aim is to encourage growth by removing various forms of taxation. We’re going to take you through what was announced, what this means for you, and when it’s happening.
Changes made with immediate effect
The most notable change that came into effect on the day of the announcement (Friday 23 September 2022) is Stamp Duty, which was removed:
- For all buyers on purchases up to £250,000 (up from £125,000).
- For first-time buyers up to £625,000 (up from £425,000). They will also be able to claim relief up to £625,000 (increased from £500,000).
This might make it a good time to consider buying an investment through your company. As if the property is £250,000 you will now pay £3,750 less stamp duty than you would have done previously.
Also, and this focuses more on individuals rather than businesses unless they’re in the industry, planned increases in the tax paid on beer, wine, spirits, and cider are scrapped.
Changes that will come into effect before the end of the current tax year
The 1.25% increase in National Insurance (NI) that came into effect in April 2022 will end on 6 November 2022. When announcing this, the Treasury noted that “Most employees will get the tax cut in their November pay packets, with some getting it in December or January depending on the complexity of their employer’s payroll software”. We understand that all of the software providers are hoping to be ready in time for November but there haven’t been any announcements or confirmations yet. So, worth checking with your payroll software provider to find out what date they’re working towards. We’ll confirm for definite to our clients ASAP.
This means that an employer’s NI contribution will return to 13.8% (from the current 15.05%) but the threshold will remain at £9,100 i.e., the level set in April 2022.
For employees, their (Class 1) contributions will return to 12% and 2% respectively. As it stands, the NI threshold remains unchanged at £12,570.
Changes that will come into effect from 6 April 2023
This is when the bulk of the changes will come into force.
- The further 1.25% rise in National Insurance will be scrapped so, while there won’t be an additional saving, there also won’t be increased deductions for employers, employees, and the self-employed.
- The cap on bankers’ bonuses of twice their annual income has been removed so they are unlimited once again.
- The Annual Investment Allowance will remain permanently at £ 1 million instead of returning to £200,000. This gives 100% tax relief to businesses on their plant and machinery investments up to the higher £1 million limit.
- An expansion of the Seed Enterprise Investment Scheme (SEIS) to double the annual investment limit to £200k to help more UK start-ups raise higher levels of finance.
- Increase the employee share option limit from £30k to £60k within the Company Share Option Plan (CSOP) scheme. A condition which limits the types of shares eligible for inclusion within the scheme will also be removed.
- The creation of new Investment Zones, which may include the West Midlands, which will offer generous, targeted and time-limited tax cuts for businesses and liberalised planning rules to release more land for housing and commercial development. Coventry Airport has been specifically named.
If you’re one of our clients, all these things will be updated automatically through our software so you won’t need to worry about doing anything to keep up-to-date with the legislation.
The one thing you do need to consider is updating your cash flow, which we can help with if you need it.
Want to talk through what this means for you? Drop us a line and we’ll be happy to talk.
(Note: the details have been updated to reflect the Government’s subsequent announcements on 3rd, 14th, and 17th October.)