The Results are in – the Emergency Budget is set to benefit Britons on the highest incomes!
If your personal finances benefitted from Friday’s budget, the chances are you were well off already.
Here’s confirmation of the main tax changes:
Income Tax:
- Basic Rate Taxpayers: the reduction in the basic rate from 20% to 19% will be introduced on 5th April 2023 – one year earlier than planned.
- Higher Rate Taxpayers: the current threshold and tax rate of 40% remains unchanged.
- Additional Rate Taxpayers: the 45% rate of tax is being scrapped – this was the “rabbit” the chancellor pulled from his hat and opens up some pension planning opportunities pre-April 2023!
Dividend Tax:
The recent 1.25% rise in dividend tax will be reversed on 5th April 2023.
- Basic Rate Taxpayers: the rate will return to 7.5%.
- Higher Rate Taxpayers: the rate will return to 32.5%.
- Additional Rate Taxpayers: the rate will be scrapped – cue business owners in charge of their own remuneration to pop the champagne!
Capital Gains Tax (CGT):
- No change; the rate remains stuck at £12,300 – any moves here will likely appear in the Autumn Budget.
Corporation Tax (CT):
- The government have scrapped plans to increase the rate from 19% to 25% from April 2023 – cue business owners to top up their empty glass!
National Insurance Contributions (NIC):
The recent 1.25% rise in NICs will be reversed on 6 November 2022.
- Employee’s NIC: the rate will return to 12%
- Employer’s NIC: the rate will return to 13.8%.
Value Added Tax (VAT):
- No change or temporary rate reduction announced to support businesses in the hospitality sector who may struggle as consumers cut back on leisure spending; although the government has scrapped the planned alcohol duty increase for wine, beer and spirits… cue all to top up our glasses (this article is nearly over!)
Other Changes of Note:
- Stamp Duty – the nil-rate threshold for First Time Buyers’ relief has increased from £300,000 to £425,000 and they can use this on a property valued up to £625,000 (previously £500,000).
- Personal Savings Allowance – scrapping the 45% tax rate gives the wealthiest access to a £500 allowance for the first time. – they’ve had enough don’t top up their glass again!
- EIS: Kwarteng has doubled the amount that can be invested into SEIS schemes to £200,000 and extended the EIS and VCT sunset clause 2025 deadline.
Summary Statement
The latest string of tax cuts will benefit those in charge of their own remuneration and on the highest incomes.
The cuts bring minimum benefit for basic and higher rate taxpayers who suffer the most as inflation surges higher … will the tax breaks and benefits for corporations and the wealthy trickle down to everyone else?
Note: The information above is for general consideration only and is subject to change dependent on specific legal implementation. Tax treatment depends on individual circumstances and may also change in the future. You should not take, or refrain from taking, action based on its content and no part of this document should be relied upon or construed as any form of advice or personal recommendation.