Well let’s summarise the decision made by Jeremy Hunt, the new Chancellor. Almost the entire “mini-budget” has been reversed.
The main points to note that have the biggest and most immediate impact are:
The main rate of corporation tax now WILL rise to 25% from 1st April 2023. There are subtle varying rates as follows though:
- Anyone with profits under £50,000 will pay corporate tax at 19%.
- Anyone with profits between £50,000 and £250,000 will pay tax at a rate between 19% and 25% worked out using what is called a marginal rate relief calculation. In summary the nearer you are to £250,000 profit the closer to 25% rate of tax you will pay.
- Anyone making profits over £250,000 will pay 25%
This hasn’t changed since last month, one of the few taxes not reversed by the new Chancellor.
National insurance was increased in April 2022 by 1.25% for employee’s and 1.25% for employers. This has been reversed with effect from 6th November. A win for employee’s who in effect get a 1.25% pay rise and for employers who see their employer’s national insurance bill reduce by 1.25%.
Dividend tax WILL now increase from 6th April 2023 reversing the announcement made last month. To summarise:
- The new lower rate will increase from 7.5% to 8.75%
- The higher rate (currently those earning over £50,270) will increase from 32.5% to 33.75%.
- The top rate of dividend tax for those earning over £150,000 will also increase to 39.50% from 38.25%.
This is staying the same, no movement now or at any point in the future is proposed.
The top rate of income tax of 45% for those with income totalling over £150,000 has been reinstated.
The announcement on IR35 has been reversed. The rules are as you were at the start of September.
Stamp duty announcements have been kept though, meaning no stamp duty on first £250,000 of a properties value.
The next £675,000 (properties up to £925,000) is now 5%
First time buyers don’t pay any stamp duty on properties with a value of up to £425,000.
At the time of writing this article (24th October) a budget is set for 31th October, where a spending review is set to be announced with any more tax changes expected to be minimal.
For further explanation of more detail of how any changes in the recent budget will affect you and your business please get in touch with any of the team at Spark.