Mini budget measures include scrapping of planned corporate tax rate increase
26 September 2022
UPDATE, 18 October 2022: Following a negative response to the mini budget and the turbulence in the financial markets, the UK prime minister has had to abandon some the planned tax changes. The chancellor was forced to resign and has been replaced by Jeremy Hunt. Further changes and pivots on the mini budget have been announced. Click here for BDO UK’s analysis of the changes.
On 23 September, the UK Chancellor presented the government’s not-so-mini “Mini Budget,” which sets out a sweeping range of measures designed to tackle rising energy costs and inflation and promote economic growth (for prior coverage, see the UK tax alert dated 8 September 2022). In what was billed as the start of a new era, we saw a return to traditional Conservative economics: reversing planned tax increases, going further still by cutting personal and business taxes and introducing measures to reduce regulation in a range of areas.
The key announcements are as follows:
- The planned 2023 increase in the corporation tax rate to 25% is cancelled; instead, the rate will remain at 19%.
- The April 2022 increase in National Insurance Contributions will be reversed as from 6 November and the Health & Social Care Levy scrapped.
- The top income tax of 45% will be abolished for individuals earning more than GBP 150,000 and will be replaced with a new top rate of 40% and the basic rate will drop to 19%. Both changes will apply as from April 2023.
- The increase in the income tax rate on dividends will be reversed as from April 2023.
- The previous legislative changes relating to off-payroll labour will be repealed from April 2023.
- VAT-free shopping will be re-introduced for overseas visitors.
- New Investment Zones will be created with enhanced tax reliefs and liberalised planning frameworks.
- The cap on bankers’ bonuses will be eliminated.
- The Seed Enterprise Investment Scheme (SEIS) and the Company Share Option Plan (CSOP) limits will be increased (relevant to share schemes) and the Enterprise Investment Scheme (EIS) and Venture Capital Trusts (VCT) investment reliefs for individuals will be extended beyond 2025.
- The Annual Investment Allowance will remain at GBP 1 million (for capital expenditure).
- Stamp duty reductions will be introduced, particularly for first-time home buyers.
An in-depth analysis of the Mini Budget can be found on the BDO UK .