On 17 November 2022, The Chancellor laid out three core priorities of stability, growth and public services in the Governments 3rd budget in as many months.
Here are some of the key points from the budget:
Income Tax
- The previously announced reduction of income tax from 20% to 19% from April 2023, has been postpone indefinitely.
- From 6 April 2023, the point at which individuals pay the additional rate will be lowered from £150,000 to £125,140.
- The personal allowance and higher rate threshold were already fixed until April 2026 and this will be maintained for a further two years, until April 2028. So your personal allowance will remain at £12,570 until April 2028 and a higher rate threshold of £50,270.
- The married couple’s allowance and blind person’s allowance by inflation for 2023/24.
National Insurance (NIC)
- The Health and Social Care Levy has cancelled plans to implement this as previously announced at the mini budget.
- For employers (Class 1A (payable by employers on taxable benefits in kind) & 1B (payable by employers on PAYE Settlement Agreements)) will be averaged across 2022/23, so the rates will be 14.53%.
- For self-employed (Class 4) this will be averaged across 2022/23, so the rates will be 9.73% and 2.73% and collected via your self assessment.
- So from 6 November Primary Class 1 NICs (employees) will be 12% and 2%; Secondary Class 1 NICs (employers) will be 13.8%.
- The primary threshold and class 2 lower profits threshold was increased from July 2022 to align with the personal allowance (for employees) and is planned to be maintained until April 2028, so £12,570 and £50,270.
- For employer the level at which they start to pay Class 1 NICs for their employees will be fixed at £9,100 until April 2028.
- Small profit threshold will be increased and fixed for 2022/23 (respectively) and 2023/24 from £6,396 to £6,726.
- Class 2 NICs rate for 2023/24 will be £3.45 per week.
- Class 4 NICs rate for 2023/24 will be £17.45
Dividends
- The government has confirmed that, from April 2023, the rates of taxation on dividend income will remain as follows:
– the dividend ordinary rate – 8.75%
– the dividend upper rate – 33.75%
– the dividend additional rate – 39.35%.
- As corporation tax due on directors’ overdrawn loan accounts is paid at the dividend upper rate, this will also remain at 33.75%.
- Dividend Allowance will be reduced from £2,000 to £1,000 from April 2023 and to £500 from April 2024.
Capital Gains Tax
- Capital gains tax annual exempt amount will be reduced from £12,300 to £6,000 from April 2023 and to £3,000 from April 2024.
Corporation Tax
- From April 2021, Corporation Tax will increase to 25% for companies with profits over £250,000.
- The 19% rate will become a small profits rate by by companies with profits of £50,000 or less.
- Companies with profits between £50,001 and £250,000 will pay tax at the main rate reduced by a marginal relief, providing a gradual increase in the effective corporation tax rate.
- Bank corporation tax surcharge changes will proceed, meaning that from April 2023 banks will be charged an additional 3% rate on their profits above £100 million and from April 2023 the rate of diverted profits tax will increase from 25% to 31%.
Capital Allowances and reliefs
- Annual Investment Allowance will not be reduced in April 2023 as planned. It will become permanent and the proposed reduction will not occur, it will stay at £1 million.
- The 100% first year allowance for electric vehicle charge points has been extended to 31 March 2025 for corporation tax purposes and 5 April 2025 for income tax purposes.
- The Super-deduction allowance is still planned to end on 31 March 2023 (this is only available for incorporated businesses).
VAT
- The VAT registration and deregistration thresholds will not change for a further period of two years from 1 April 2024, staying at £85,000 and £83,000 respectively.
Employers Allowance
- Employers allowance is to remain at £5,000
National Living Wage and National Minimum Wage
- The government will increase the National Living Wage (NLW) and National Minimum Wage from 1 April 2023 as follows:
• the rate for 23 year olds and over to £10.42 an hour
• the rate for 21-22 year olds to £10.18 an hour
• the rate for 18-20 year olds to £7.49 an hour
• the rate for 16-17 year olds to £5.28 an hour and
• the apprentice rate to £5.28 an hour.
Research and Development
- For expenditure on or after 1 April 2023, the Research and Development Expenditure Credit (RDEC) rate will increase from 13% to 20%
- The small and medium-sized enterprises (SME) additional deduction will decrease from 130% to 86%
- The SME credit rate will decrease from 14.5% to 10%.
Seed Enterprise Investment Scheme
- From April 2023, companies will be able to raise up to £250,000 of Seed Enterprise Investment Scheme (SEIS) investment, a two-thirds increase. To enable more companies to use SEIS, the gross asset limit will be increased to £350,000 and the age limit from two to three years. To support these increases, the annual investor limit will be doubled to £200,000.
Company Share Option Plan
- From April 2023, qualifying companies will be able to issue up to £60,000 of Company Share Option Plan (CSOP) options to employees, twice the current £30,000 limit.
Vehicles
- The government will set the rates for the taxation of company car benefits until April 2028 to provide long term certainty for taxpayers and industry. Rates will continue to incentivise the take up of electric vehicles.
- In addition, from 6 April 2023 car and van fuel benefits and the van benefit charge will increase in line with inflation
Inheritance tax
- The inheritance tax nil-rate bands will stay fixed at current levels for a further two years until April 2028. The nil-rate band will continue at £325,000, the residence nil-rate band will continue at £175,000 and the residence nil-rate band taper will continue to start at £2 million.
Stamp Duty Land Tax
- The residential nil rate tax threshold increased from £125,000 to £250,000.
- The nil rate threshold for First Time Buyers’ Relief increased from £300,000 to £425,000 and the maximum amount that an individual can pay while remaining eligible for First Time Buyers’ Relief increased to £625,000.
- The changes apply to transactions with effective dates on and after 23 September 2022 in England and Northern Ireland.
- There are no changes in relation to purchases of non-residential property.
A link to the Autumn statement speech = https://www.gov.uk/government/speeches/the-autumn-statement-2022-speech
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