Tax changes in the ‘mini-budget’
In the first major statement of fiscal policy following the appointment of Liz Truss as Prime Minister, Kwasi Kwarteng, Chancellor of the Exchequer, set out a ‘mini-budget’ on 23 September.
In addition to providing more details on the anticipated energy bill support measures, the mini-budget set out a long list of tax cuts and other supply-targeted measures. This is the first set of measures in the Government’s 2022 growth plan, which is aimed at the UK achieving an annual growth trend rate of 2.5%. There will be further measures published in the coming months, in addition to a forecast from the Office for Budget Responsibility.
Summary of the tax changes in the mini-budget
The table below contains a summary of all the changes mentioned.
| Dates active from | Measure | Change(s) |
|---|---|---|
| Sep 2022 | SDLT | Nil-rate band increased from £125,000 to £250,000, with the nil-rate band for first time buyer's increasing from £300,000 to £425,000 and to be available on properties costing up to £625,000, (previously £500,000). |
| It is likely that we will hear soon whether corresponding changes will be made to Land Transaction Tax (in Wales) and Land and Buildings Transaction Tax (in Scotland). | ||
| Nov 2022 | NICs | The recent increase of 1.25% will be reversed, with the planned Health and Social Care Levy of an additional 1.25% also cancelled. |
| April 2023 | Income tax | 1% reduction (20% to 19%) in basic rate brought forward. |
| Additional rate (45% on income above £150,000) abolished. | ||
| 1.25% increase in the dividend rates will be reversed. | ||
| April 2023 | Corporation tax | Planned increase from 19% to 25% cancelled. |
| Banking company surcharge will remain as it stands (at 8%), rather than being reduced to 3%. The annual allowance for the banking company surcharge will be increased from £25 million to £100 million. | ||
| April 2023 | Seed enterprise investment scheme ('SEIS') | Maximum investment amount increased from £100,000 to £250,000. |
| Gross asset limit increased from £200,000 to £350,000. | ||
| Time period that trade can have been carried on prior to investment extended from two to three years. | ||
| April 2023 | Annual investment allowance | Temporary relief becoming permanent at £1 million level. |
| April 2023 | CSOP | £30,000 limit on options per individual to be increased to £60,000. |
| April 2023 | Off-payroll working | Rules to be repealed, with workers providing their services via an intermediary to be responsible for determining their own employment status and accounting for tax accordingly. |
| April 2023 | Diverted profits tax | Planned increase from 25% to 31% cancelled. |
| TBC | VAT | VAT free shopping for visitors to the UK to return. |
The growth plan introduced new ‘investment zones’, a similar concept to freeports but without any customs reliefs. These will be specified sites that will benefit from a range of tax incentives yet to be established. Currently the reliefs being considered are substantial advantages for business rates, enhanced capital allowances and structures and buildings allowance, employer NICs relief and relief from SDLT.
The Government have also committed to reviewing their position on various other matters, in some cases promising further reforms to come. These are widespread and include infrastructure developments, agriculture, employee share schemes, VAT, alcohol duty, pensions, research and development, local growth funds and housing.
If you have any queries on how the tax changes in this mini-budget will affect you, or you are in need of tax advice more generally, please contact Cathy Bryant.
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