Assistant Tax Manager, Natalie Filipovic looks at the 'mini-budget' delivered by Chancellor Kwasi Kwarteng today, Friday 23 September 2022. Below is a brief summary of the key points:
-
- The additional rate of income tax, of 45% for the rest of the UK, will be abolished. The Scottish additional rate of 46% remains in force, at least for the time being.
- The rest of the UK’s basic rate of income tax will reduce from 20% to 19% from April 2023, bringing the UK rate in line with the lower Scottish rate.
- The rate of taxation on dividends will be cut by 1.25% from April 2023, thereby resetting to the rates in force prior to the increases in April 2022. The tax free dividend allowance of £2,000 remains unchanged for the time being, and dividends received within an ISA also remain tax free. This change applies to the whole of the UK, including Scotland.
- From 6 November 2022, the temporary 1.25% increase in National Insurance rates is being reversed for the rest of the financial year. Additionally, the introduction of a separate Health and Social Care Levy tax in April 2023 has been cancelled. It is claimed that these changes will see many people save an average of £330 next year, with many businesses saving £10,000. Again, this applies to the whole of the UK.
- Annual Investment Allowance – a 100% capital allowance for qualifying expenditure on plant and machinery – to remain at £1 million indefinitely.
- Enterprise Investment Scheme “sunset clause” has been scrapped – therefore tax relief will continue to be available on qualifying investments beyond the planned termination date of 6 April 2025.
- IR35 legislation for off-payroll working will be simplified – further details to be provided in due course.
- Introduction of VAT free shopping for overseas shoppers throughout the UK.
- Stamp duty will be reduced for property purchases in England and Northern Ireland – currently, there is no Stamp Duty on the first £125,000 of a property’s value. This will be doubled to £250,000.
- The additional rate of income tax, of 45% for the rest of the UK, will be abolished. The Scottish additional rate of 46% remains in force, at least for the time being.
These measures represent a significant change of taxation policy by the UK Government. It will be interesting to see what tax changes, if any, are made by the Scottish Government in response. For now, the income tax differences between Scottish taxpayers and those living in the rest of the UK continue to widen.
Murray Beith Murray, Edinburgh
Murray Beith Murray is a multi-disciplinary private client practice. We are able to advise on a range of matters including personal tax, asset protection, estate planning and trusts. If you would like to speak to one of our expert tax advisors or lawyers then please complete our enquiry form or call us on 0131 225 1200.
Murray Beith Murray was established in 1849, as advisors for generations of clients, committed to our values of integrity, expertise and trust. This aim and these values continue to this day as does our commitment to be here when you need us.