Emergency Budget Summary September 2022 – A Summary

Kathryn

Today the new Chancellor, Kwasi Kwarteng announced his plans for dealing with the cost-of-living crisis in his Emergency Budget. We’ve been through the details and put together a summary covering the implications for individuals, businesses, shareholders and property owners.

Individuals

  • 1.25% Increase in National Insurance Contributions to be reversed from November 2022.  This will impact Class 1 for Employers and Employees and Class 4 for the self-employed.
  • No indication that the increase in the National Insurance thresholds for Class 1 and Class 4 will be reversed.
  • 1.25% Health and Social care levy which was to replace the National Insurance increase from April 2023 has been scrapped.
  • The basic rate of tax is reduced from 20% to 19% from April 2023.
  • The 45% higher rate of tax for earnings in excess of £150,000 is abolished from April 2023.

Businesses & self-employed

  • Previous reforms to off-payroll working are to be reversed from April 2023 so that all workers will again be responsible for determining their own employment status and paying the appropriate tax and National Insurance under the IR35 rules.
  • No indication of delays to the introduction of making tax digital for income tax or the reform of basis periods which are still scheduled to be come into force from April 2024.
  • The expected reduction in the Annual Investment Allowance limit to £200,000 from April 2023 is scrapped with the intention for it to remain at £1,000,000 permanently.
  • Confirmation of the Energy Bills support scheme for businesses which had been announced previously.
  • Investment Zones to be established in 38 local authorities in England in which new businesses can benefit from business rates relief, reduced stamp duty, enhanced capital allowances and a zero rate of Employers’ National Insurance for new employees.  Similar zones are expected in Scotland, Wales and Northern Ireland

Companies & shareholders

  • 1.25% increase in dividend tax rates to be reversed from April 2023, as will the increase on the tax charge for overdrawn directors’ loan accounts.
  • The planned increase in corporation tax rates from April 2023 is scrapped.
  • The expected reduction in the Annual Investment Allowance is scrapped with the intention for it to remain at £1,000,000 permanently.
  • Confirmation of the Energy Bills support scheme for businesses which had been announced previously.
  • Investment Zones to be established in 38 local authorities in England in which new businesses can benefit from business rates relief, reduced stamp duty, enhanced capital allowances and a zero rate of Employers’ National Insurance for new employees.  Similar zones are expected in Scotland, Wales and Northern Ireland.
  • Increase to the amount of investment companies can receive through SEIS (Seed Enterprise Investment Scheme) from £250,000 to £150,000 and increase in individual investor limit from £100,000 to £200,000.

Property

  • Immediate increase in the Stamp Duty Land Tax nil-rate threshold for residential property from £125,000 to £250,000.
  • Immediate increase in the Stamp Duty Land Tax nil-rate threshold for first-time buyers from £300,000 to £425,000.
  • These measures only apply in England and Northern Ireland – not Wales and Scotland who operate their own equivalent land transaction taxes.

Other announcements

  • The Office of Tax Simplification – an independent body of H M Treasury – is to be abolished.
  • Alcohol duties to be frozen for 12 months from February 2023.
  • The cap on bankers’ bonuses is lifted.
  • A consultation into the introduction of VAT-free shopping for non-UK visitors.

For more information

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