UK mini-budget 2022 – Corporate

In delivering his mini-budget (referred to by the government as its “Growth Plan”), the Chancellor, on September 23, 2022, announced a wide-ranging series of tax cuts and reforms, with a focus on incentivisation, investment and making Great Britain more competitive on the global stage. Among the most significant changes announced are the following:

Planned corporation tax increase cancelled

The planned corporation tax increase to 25%, which was due to take effect from April 2023, has been canceled. As a result, the UK corporation tax rate will remain at 19%.

Reduction in national insurance contributions

The recent increase in employer and employee national insurance contributions (of 1.25%) is to be reversed from November 6, and the planned introduction of the Health and Social Care Levy from April 2023 (which was due to replace the recent rise in national insurance contributions ) is being repealed.

Dividend tax rates

The government has reversed the 1.25% increase in dividend tax rates from April 2023, with the intention of supporting entrepreneurs and investors across the UK to drive economic growth. The dividend additional rate will also be removed to align with the dividend upper rate, which is being reduced to 32.5% from April 6, 2023.

Reduction in income tax rates

The government will bring forward the 1% cut to the basic rate of income tax until April 2023, 12 months earlier than planned.

As part of the government’s commitment to lower taxes and simplify the tax system – and to improve the attractiveness of the UK as a place to work relative to other countries – the additional rate of income tax will also be removed from April 2023. This means that the top income tax rate will become 40%.

Repeal of IR35 off-payroll working reforms

In a significant U-turn, the government has announced that the reforms made to the IR35 off-payroll working rules in 2017 for the public sector and in 2021 for the private sector will be repealed from April 6, 2023. From this date, workers across the UK providing their services via an intermediary, such as a personal service company, will once again be responsible for determining their employment status and paying the appropriate amount of income tax and national insurance contributions.

Introduction of “Investment Zones” with tax incentives

The government has announced the intention to introduce “Investment Zones” across the UK. Areas with Investment Zones will benefit from tax incentives, planning liberalization and wider support for the local economy. Businesses in designated sites will benefit from time-limited tax incentives over ten years, including 100% relief from business rates, enhanced capital allowances, employer national insurance contributions relief and relief from stamp duty land tax.

Company share option plans

From April 2023, qualifying companies will be able to issue up to GBP60,000 of CSOP options to employees (double the current GBP30,000 limit), with restrictions on share classes within CSOP also being eased to better align the scheme rules with the rules in the Enterprise Management Incentive scheme and widening access to CSOP for growth companies.

Seed enterprise investment scheme

Also from April 2023, companies will be able to raise up to GBP250,000 of SEIS investment, a two-thirds increase. To widen access to the scheme there will also be increases to the gross asset limit (to GBP350,000), to the age limit under the scheme (to three years) and to the annual investor limit (which will be doubled to GBP200,000 ).

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