Mini budget 2022: Tax cuts all round and key points

It comes on top of plans to freeze household energy bills at £2,500 for a typical household. The government was never going to let households face soaring energy bills. However, it is great change and tax cuts all round.

National Insurance (NI)

The 1.25 percentage tax point rise in national insurance contributions (NICs), which took effect earlier this year, will be reversed on 6 November 2022.

Both income tax and National Insurance (NI) contributions will be cut: the basic rate of income tax is now due to be cut from 20 per cent to 19 per cent from April 2023, instead of in 2024 as proposed by Rishi Sunak earlier this year. The higher rate of 45 per cent, paid on earnings above £150,000 per year, will also be abolished in England, Wales and Northern Ireland, to be replaced by one single higher rate of 40 per cent from April paid on anything earned over £50,270.

Income Tax

The government will also bring forward the one percentage tax cut to the basic rate of income tax from 20p to 19p in April 2023, 12 months earlier than planned. The additional rates of Income Tax abolish and– accompanied by changes to the dividend tax rate.

The government will scrap the 45% top rate of income tax for high earners, replacing it with a 40% rate.

Corporation Tax

The cancellation of the planned increase to the Corporation Tax (CT) main tax rate from 19% to 25% – with the main rate remaining at 19% from 1‌‌‌ ‌‌April 2023. However, the plan to remove the corporation tax hike would directly encourage more overseas businesses to set up in the UK and raise more tax for the UK through taxation.

Reforms IR35

The repeal of reforms to the Off-Payroll Working (OPW) rules introduced in the public sector in 2017 and extended to medium and large-sized organisations in the private and voluntary sectors in 2021with workers providing their services via an intermediary once again responsible for determining their employment status. It will be repealed from April 2023, when original rules, where contractors were responsible for assessing their own tax obligations, will come back into force.

Annual Investment Allowance

Confirmation that the Annual Investment Allowance (AIA) will be set at £1 million permanently, originally raised from £200,000 as a temporary measure in January 2019 (and due to end in March 2023)

EIS and SEIS Schemes Extended

Both the Enterprise and Seed Enterprise Investment Schemes (EIS and SEIS) an expansion to help more UK start-ups raise higher levels of finance. It is doubling the annual investor limit to £200,000, increasing the gross asset limit to £350,000 and making it easier for investors to claim tax reliefs, due to come into force from 6‌‌‌ ‌‌April 2023

to come into force from 6‌‌‌ ‌‌April 2023

Stamp Duty Cut Permanently

The introduction of new investment zones around the UK where enhanced tax reliefs will be offered for Stamp Duty Land Tax (SDLT), Enhanced Capital Allowances, Structures and Buildings Allowance and Employer National Insurance contributions

Pay any stamp duty on the first £250,000 of a property (doubled from £125,000). The Treasury says this means 200,000 more people every year will be able to buy a home without paying any stamp duty at all.

First-time buyers will now pay no stamp duty up to £425,000 (up from £300,000). The Government has also increased the value of the property on which first-time buyers can claim relief, from £500,000 to £625,000.

Company Share Option Plan

Changes to the Company Share Option Plan (CSOP) scheme – increasing the employee share option limit from £30,000 to £60,000 and removing a condition which limits the types of shares eligible for inclusion within the scheme, both due to take effect from 6‌‌‌ ‌‌April 2023.