Welcome to the TaxAntics September 2022 Newsletter in which we will be concentrating on the “baby budget” announced last Friday.

Reminiscent of a scene from the 80’s movie, Ground Hog Day, many tax changes proposed to take effect from 6 April 2023 were cancelled.

For many the announcements will be welcome. It remains to be seen how much of an impact they have on reducing the struggles many people and businesses face.

For anyone needing further assistance, please do contact us by using the contact form or emailing advice@TaxAntics.co.uk.  

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Growth plan 2022

On Friday 23 September 2022, the Chancellor, Kwasi Kwarteng, unveiled the Growth Plan which was described as being aimed at tackling high energy costs and rising inflation by delivering higher productivity and wages to realise the huge potential in the British economy.

Personal Taxes

Income tax

The anticipated reduction of the basic rate of income tax to 19% (currently 20%) was bought forward to the 6 April 2023.

To help charities, a four-year transition period for Gift Aid relief will apply, keeping the income tax basic rate relief at 20% until 5 April 2027.

There will also be a one-year transitional period for Relief at Source (RAS) pension schemes to allow them to continue to claim tax relief at 20%.

The 45% additional rate of income tax will be abolished altogether from 6 April 2023 and it follows that the previously restricted £500 personal savings allowance will be available to current additional rate tax payers.

The proposed 1.25% increase to dividend tax rates were also cancelled with effect from 6 April 2023.

IR35/disguised employment

The off-payroll working rules introduced from 6 April 2021 will be repealed from April 2023. All contractors providing services through an intermediary will once again become responsible for assessing their own employment status.

National insurance

Although announced on Thursday 22 September 2022 ahead of the Growth Plan’s official release, the 1.25% increase on Class 1 and Class 4 National Insurance rates which came into effect from 6 April 2022 will be reduced to pre 6 April 2022 levels from 6 November 2022 as part of the growth plan.

From 6 April 2023, this will benefit all employees and self-employed individuals earning more than £12,570.

Capital Taxes

Stamp Duty Land Tax (“SDLT”)

The standard nil rate threshold above which Stamp Duty Land Tax (SDLT) must be paid on the purchase of residential properties in England and Northern Ireland was increased from £125,000 to £250,000 with immediate effect, saving the purchaser £2,500 on all residential purchases as illustrated:

Purchase price	Before 22 September 2022	From 23 September 2022
£250,000	£2,500	£0
£500,000	£15,000	£12,500
£1,000,000	£43,750	£41,250

First time buyers

The nil rate threshold that first-time buyers can receive was also increased from £300,000 to £425,000. The maximum value of a property on which first-time buyer’s relief can be claimed was raised from £500,000 to £625,000 with the potential SDLT savings illustrated as follows:

Purchase price	Before 22 September 2022	From 23 September 2022
£250,000	£2,500	£0
£500,000	£10,000	£3,750
£625,000*	£21,250	£10,000

 

*Standard SDLT rules apply on purchases above £625,000

First-time buyers can still also save for their deposit using a lifetime individual savings account (“LISA”). Up to £4,000 each year can be paid in and the government will add a 25% bonus to their savings, up to a maximum of £1,000 per year.

Business Taxes

Corporation Tax

The planned increase in the UK Corporation Tax rate from 19% to 25% and introduction of a marginal rate on profits between £50,000 and £250,000 that was due to take effect in April 2023 will not go ahead.

Annual Investment Allowance

The temporary £1,000,000 level of the Annual Investment Allowance (“AIA”) will become permanent, removing the £200,000 cap proposed to take effect from 1 April 2023.

Seed Enterprise Investment Scheme

From April 2023, the amount companies will be able to raise under the Seed Enterprise Investment Scheme (“SEIS”) will be raised from £100,000 to £250,000. To allow more companies to use the SEIS, the gross asset limit will be increased to £350,000. The company age requirement will be increased from two to three years. The annual investor limit will be doubled to £200,000.

Company Share Option Plan

Qualifying companies will be able to issue up to £60,000 of Company Share Option Plan (“CSOP”) options to employees; doubling the current £30,000 limit from 6 April 2023.

Investment Zones

The government will work with the devolved administrations to introduce Investment Zones across the UK, which will benefit from the following tax reliefs over ten years:

A nil rate for Employer National Insurance contributions applicable to new employees earning up to £50,270 per year (the basic rate band);

Full Stamp Duty Land Tax (“SDLT”) relief on land purchased for development;

A 100% First Year enhanced capital allowance relief on plant and machinery;

A 20% Enhanced Structures and Buildings Allowance relief ;

A 100% business rates relief on newly occupied or expanded premises;

Long-Term Investment for Technology & Science

The Long-Term Investment for Technology & Science (“LIFTS”) competition, providing up to £500,000,000 to support new funds that target investment from pensions and other schemes will also be introduced to catalyse investment into UK’s science and technology businesses.

Bank Corporation Tax Surcharge

The Bank Corporation Tax Surcharge will also be cancelled. From April 2023 banks and building societies will continue to pay an additional 8% rate of tax on their profits, rather than the reduced 3% rate that would have been the legislative default, leading to a combined rate of 27%. The increase in the Surcharge allowance to £100,000,000 will still go ahead.

super-deduction rules

To ensure that the relief continues to operate as intended, the technical provisions for the super-deduction will be amended as a result of the Corporation Tax rate being retained at 19% from 1 April 2023.

Diverted Profits Tax

The proposed increase from 25% to 31% effective from April 2023 will now be retained at 25% so as to keep the current six percentage point differential with the headline rate of corporation tax.

Other announcements

The Office of Tax Simplification will be abolished. We are sure our readers will join us in celebrating how much simpler tax has got in recent years!

Thank you for reading our update from the TaxAntics family!