Chancellor slashes taxes in dramatic ‘mini Budget’

In today’s mini-Budget, Chancellor Kwasi Kwarteng announced some dramatic tax cuts – aimed at both businesses and individuals. Here we have highlighted the key points.

You can read the full ‘Growth Plan’ Government summary here.

Off Payroll rules to be scrapped from April 2023

Contractors will be overjoyed to hear that the hated ‘Off Payroll’ rules are to be abolished completely, with a return to the IR35 status quo that existed prior to 2017. You can read more about this change here. Section 3.44.

Planned Corporation Tax rise cancelled (since reversed!)

The main rate of CT was due to rise to 25% from April 2023. This has now been cancelled. The current 19% rate will remain in place. Section 3.9.

This measure has subsequently been re-instated, and the CT rise will go ahead from April 2023 after all.

1.25% NI rise to be cancelled

The 1.25 point rise in National Insurance rates from April 2022 onwards will be cancelled from November 6th 2022 onwards. Section 3.20.

1.25% dividend tax rise to be cancelled

The 1.25 point rise in dividend tax from April 2022 onwards will be cancelled from April 2023 onwards. Section 3.23.

1% cut in basic rate of income tax

From April 2023, the basic rate of income tax will be cut from 20% to 19%. Section 3.21.

Annual Investment Allowance (AIA) permanetly fixed at £1m

The AIA allows businesses to write down the cost of qualifying plant and machinery purchases against Corporation Tax during the first year. The £1m is set to become a permanent threshold. Previously, it was due to fall to £200,000. Section 3.11.

Additional rate of income tax to be abolished *

The 45% ‘additional’ rate of income tax will be abolished completely from April 2023. The rate applies to incomes over £150,000 per year.

* the Government reversed this announcement on 3rd October 2023. So, the 45% rate stays in place after all!

Stamp Duty changes

No Stamp Duty will apply to transactions below £250,000 – doubling the currrent threshold. Effective immediately.

The ‘first time buyer’ threshold is to rise from £300,000 to £425,000.

First time buyers can now claim relief on purchases up to £625,000 (from £500,000).

Office of Tax Simplification (OTS) to be simplified

Yes, the organisation tasked with simplifying the tax system is to be wound down. The task of tax simplification is to be shared across individual Government departments instead.