With a turbulent start to September 2022, the announcement of a new Prime Minister, and new Chancellor, It was expected that there would be some changes to existing policies as the new government starts to make its claim on the economy of the Nation.
There was some delay in this due to the passing of Her Majesty the Queen, and the following national wake period leading to the state funeral, but soon after it was back to business for the government.
We’ll list below some of the changes that have been announced, and over the coming weeks we’ll start to understand what they mean in plain English, and what impact they will have to the economy (in fact, as we delayed this publication slightly, we know that the UK Sterling currency has dropped against other currencies)
Personal Tax
- Basic rate tax – from April 2023 the basic rate of tax will drop from 20% to 19%, mirroring that of current corporate tax.
- Higher rate tax – the additional rate of 45% will be removed from April 2023. **edit – this was reversed on 3rd October 2022 and as such will remain in place**
- National Insurance Contributions – will be reduced down by 1.25% on employee’s contributions from 6th November 2022 (back to original rate)
- The Health and Social Care Levy – this proposal that was due to come into effect from April 2023 has now been cancelled.
- Dividend tax – in line with the reduction of the national insurance rates, the additional 1.25% increase will be reduced from April 2023.
Business Tax
- Corporate Tax – the rate of Corporation Tax will remain at 19% and not increase to 25% in April 2023.
- Investment Zones – new Investment zones will be set up, with funds for the devolved administration to allow them to introduce equivalent areas. Areas within investment zones will benefit from tax incentives, planning liberalisation and wider support for the local economy. Tax incentives, intended to be included are:
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- Business rates – 100% relief from business rates on newly occupied business premises, and certain existing businesses where they expand in English investment zone tax sites.
- Enhanced capital allowances – 100% first-year capital allowance for companies qualifying expenditure on plant and machinery assets for use in tax sales.
- Enhanced structures and Buildings allowance – accelerated relief to allow businesses to reduce their taxable profits by 20% of the cost of qualifying non-residential investment per year, relieving 100% of their investment cost over five years.
- Employer National Insurance Contributions Relief – zero-rate Employer NICs on salaries of any new employee working on the tax site for at least 60% of their time on earnings up to £50,270 per year, with Employer NICs being charged at the usual rate above this level.
- Stamp Duty Land Tax – a full SDLT relief for land and buildings bought for use or development for commercial purposes, and for purchases of land and buildings for new residential development.
- Capital Allowances – The temporary annual investment allowance (AIA) will become permanent at £1m.
- National Insurance contributions – in line with the above reduction of the rate of employee NICs, the employer’s NIC rate also carries a 1.25% reduction from 6th November 2022
- The Heath and Social Care Levy – This cancels the planned introduction which was planned to be introduced on 6th April 2023.
- Repealing Off-Payroll working reforms – the 2017 and 2021 reforms to the off-payroll working rules (IR35) will be repealed from 6th April 2023. This means that, from this date, workers across the UK providing their services via an intermediary, such as a personal service company, will once again be responsible for determining their employment and paying the appropriate amount of tax and NICs.
Stamp Duty Land Tax
- Stamp Duty Land Tax – The threshold above which SDLT must be paid will be increased to £250,000 (the current threshold is £125,000) In addition for first-time buyers, the threshold on which they pay residential SDLT will increase and become payable on properties on or above £425,000 (Currently £3000,000) and the maximum value of a property on which first-time buyers relief can be claimed will increase to £625,000 (from £500,000)
Other elements
- Alcohol duties and Alcohol Duty Reform – the duty rates for all categories will be frozen from 1st February 2023. A response to the consultation on the new alcohol duty system and draft legislation has been released and a new consultation on some further technical issues has been launched. The reforms will be implemented from 1st August 2023.
- VAT-Free Shopping for Overseas Visitors – a new digital VAT-free shopping scheme will be introduced. A consultation will gather views on the approach and design of the scheme. the new VAT-free shopping scheme for non-UK visitors to Great Britain which will enable them to obtain a VAT refund on goods bought in the high street, airports and other departure points and exported from the UK in their personal belongings.
