We set out below a summary of the main announcements but in the meantime please speak to your usual Statura contact should you wish to discuss the content of this document in more detail or indeed the way in which the Mini Budget might affect your personal circumstances.
Corporation Tax rates
The government has now cancelled the planned increase. Rather than rising to 25% from April 2023, the rate will remain at 19% for all firms, regardless of the amount of profit made. At 19% the UK Corporation Tax rate is significantly lower than the rest of the G7 and the lowest in the G20.
Under the previous government’s plans, the rate of Corporation Tax was to increase from 19% to 25% from April 2023 for firms making more than £250,000 profit. Companies making between £50,000 and £250,000 profit would have also faced a rise in Corporation Tax, with the rate increasing incrementally from 19% to 25% depending on how much profit a firm was making.
The planned increase in the rate of Diverted Profits Tax from 25% to 31% and the planned reduction in the Corporate Tax surcharge rate for banking companies (which will therefore remain at 8% although the bank surcharge allowance will still increase from £25m to £100m), both of which had been due to take effect from 1 April 2023, have been cancelled.
Capital allowances
Capital allowances allow businesses to write-off their costs of qualifying capital investments against their taxable profits over time.
The Annual Investment Allowance (AIA), which allows a 100% deduction for qualifying plant and machinery expenditure up to the AIA limit incurred, has been £1m since 1 January 2019 and was expected to fall to £200,000 on 1 April 2023. The £1m threshold has now instead been made the permanent level of AIA.
The 130% super deduction announced in March 2021 will however end in April 2023 as planned and has not been extended.
Investment zones
The government is in discussions with 38 local authorities to establish investment zones in England and intends to deliver this opportunity to drive local growth also in Scotland, Wales and Northern Ireland.
Businesses in designated areas in investment zones will benefit from 100% business rates relief on newly occupied and expanded premises.
In addition, businesses will receive full stamp duty land tax relief on land bought for commercial or residential development and a zero rate for Employer National Insurance contributions on new employee earnings up to £50,270 per year.
To incentivise investment there will also be a 100% first year enhanced capital allowance relief for plant and machinery used within designated sites and accelerated Enhanced Structures and Buildings Allowance relief of 20% per year.
Rates and allowances
The government had already pledged to reduce the basic rate of income tax from 20% to 19% from April 2024. This will now be brought forward by 12 months to April 2023.
The government has also abolished the Additional Rate of Income Tax of 45% (which currently applies to annual income above £150,000). From April 2023 there will be a single higher rate of Income Tax of 40%, this means that all annual income above £50,270 will be taxed at this 40% rate.
The government is also reversing the 1.25% increase to the rate of income tax on dividends which took effect in April 2022. From April 2023 addtional rate taxpayers will also see the additional rate of dividend tax of 38.1% abolished. Therefore the maximum rate of income tax on dividends will be 32.5%.
National Insurance Contributions rates and the Health and Social Care Levy
The government is cancelling the Health and Social Care Levy, which took effect in April 2022 and initially introduced via a 1.25% rise in National Insurance contributions. This will be delivered in two parts:
Off-payroll working
The off-payroll working rules (IR35) apply where workers provided their services via an intermediary such as a personal service company. They were brought in for the public sector in 2017 and the private sector in 2021 and have now been reversed.
This announcement does not abolish IR35 but, from April 2023, takes us back to the rules in place from 2000 whereby contractors working for an organisation via an intermediary will once again be responsible for determining their employment status and paying the appropriate amount of tax and national insurance contributions. This is expected to make it easier for companies to engage with people through personal service companies.
VAT-free shopping ended for Great Britain in 2020, after the UK left the EU.
The government will introduce digital sales tax-free shopping for overseas visitors through a refund scheme (this can be applied to goods bought on the high street, airports and other departure points and exported in personal baggage). A consultation is currently underway, and the design of the scheme will be delivered as soon as possible.
The government will scrap the planned alcohol duty increase for wine, beer and spirits.
For transactions completing on or after 23 September, the government is cutting Stamp Duty Land Tax for those purchasing a residential property by doubling the level at which people begin paying this tax (nil rate band). Now, the first £250,000 of the purchase price of the property is exempt, compared to the previous threshold of £125,000.
Similarly, the level at which first-time buyers start paying stamp duty has been increased from £300,000 to £425,000.
In addition, the government is allowing first-time buyers to access the relief when they buy a property costing less than £625,000 rather than the current £500,000.
The Seed Enterprise Investment Scheme
The Seed Enterprise Investment Scheme (SEIS), designed to help more UK start-ups raise higher levels of finance, will be expanded with effect from 6 April 2023. Investor’s annual investment limit has been doubled to £200,000, the investee company’s gross asset limit has been raised to from £250,00 to £350,000 and it will be easier for investors to claim tax reliefs.
Company Share Option Plan
Changes will be made to the Company Share Option Plan (CSOP) scheme with effect from 6 April 2023, increasing the employee share option limit from £30,000 to £60,000 and removing a condition which limits the types of shares eligible for inclusion within the scheme.