Mini-Budget 2022

The chancellor, Kwasi Kwarteng, has presented his mini-budget and “The Growth Plan 2022” and makes growth the government’s central economic mission, setting a target of reaching a 2.5% trend rate. Sustainable growth will lead to higher wages, greater opportunities and provide sustainable funding for public services. announcing major reversals to a large chunk of his predecessor's tax policies, which, together with a package of tax cuts, will greatly benefit owner-managed businesses.

Below are the highlights of his growth plan:

Self-Assessment & Income Tax

From 6 April 2023:

The basic rate of tax is reduced from 20% to 19%.
The additional rate of income tax of 45% is removed, meaning that the top rate of tax is 40%.
The additional rate of tax on dividends will also be removed.

Changes to NIC (National Insurance)

From 6 November 2022 (or as soon as payroll systems can be changed, if later)

Reverse the 1.25% increase in NICs rates and cancel the Health and Social Care Levy
Employee rates will return to 12% and 2%, with an employer's rate of 13.8%.
The Self Employed rate will return to 9% and 2%.

Off-payroll working arrangements (IR35 amendments)

From 6 April 2023:

The 2017 and 2021 reforms to off-payroll working in the public and private sectors are reversed.
Workers providing their services via an intermediary will once again be responsible for determining their own employment status and paying the appropriate amount of tax and National Insurance contributions under the IR35 rules.

Company Taxes (CT)

The planned increase in Corporation Tax from 19% to 24% in April 2023 is reversed

The 19% rate will continue to apply.

Diverted Profits Tax was also due to increase from 25% to 31% in April 2023. This measure is also reversed, but diverted profit tax will remain at 6% above the main rate of Corporation Tax at 25%.

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Capital Allowance & enhanced AIA

The planned reduction in the AIA limit to £200,000 from 1 April 2023 will be scrapped.
The AIA limit to be permanently set at £1 million.
This announcement comes alongside plans to develop Investment Zones in 38 local authorities in England which will benefit from additional enhanced capital allowances

Tax on Dividends

From 6 April 2023

The 1.25% increase in the dividend rates is to be reversed.
This change also affects the tax rate of tax paid by companies on outstanding loans to participators, which will reduce too.

Company Share Schemes (CSOP)

Qualifying companies will be able to issue up to £60,000 of CSOP options to employees, double the current £30,000 limit.
The ‘worth having’ restriction on share classes within CSOP will be eased, better aligning the scheme rules with the rules in the Enterprise Management Incentive scheme and widening access to CSOP for growth companies.

Value added Tax (VAT)

A new digital, VAT-free shopping scheme will be created to attract non-resident visitors.

Non-UK visitors to Great Britain will be able obtain a VAT refund on goods bought in the high street, airports and other departure points and exported from the UK in their personal baggage.

Under consultation

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Seed Enterprise Investment Scheme (SEIS)

From April 2023:

Companies will be able to raise up to £250,000 of SEIS investment. The current limit is £150,000.
The gross asset limit will be increased from £200,000 to £350,000, and the trading time limit from two to three years.
The individual annual investor limit of £100,000 will be doubled to £200,000.

Stamp Duty Land Tax (SDLT)

From midnight on 23 September 2023:

The Residential nil-rate threshold increases from £125,000 to £250,000
This affects SDLT calculations for all types of residential property transactions, except for First Time Buyers' Relief
The Nil-rate threshold for First Time Buyers’ Relief increases from £300,000 to £425,000
The maximum amount that an individual is able to pay for a home while remaining eligible for First Time Buyers’ Relief, increases from £500,000 to £625,000

* Only applicable to the purchase of Residential property in England and Northern Ireland and does not apply to Scotland or Wales.