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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:

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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.

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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

Contact us if you wish to know more.