Chancellor’s Statement

On Friday the Chancellor of the Exchequer, the Rt Hon Kwasi Kwarteng MP, published the government’s Growth Plan – a package of measures to deliver growth, a simplified tax system that supports business investment across the United Kingdom and allows people to keep more of their own money.

Amongst all the tax cutting measures, the changes to the IR35 regulation stands out. From 6th April 2023, workers providing their services via an intermediary will be responsible for determining their employment status not the company they contract to. This takes the law back to how it was before 2017.

Headline measures announced too on Friday include:

Business

• The cancellation of the planned increase to the Corporation Tax main rate from 19% to 25%. The main rate will remain at 19% from 1 April 2023
• 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)
• 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

• 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 2021. From 6 April 2023, workers providing their services via an intermediary will be responsible for determining their employment status and paying the correct amount of tax and National Insurance contributions

Personal

• Bringing forward the one percentage point cut to the basic rate of Income Tax to 19% from April 2023 and abolishing the additional rates of Income Tax for earners over £150,000.
• The above tax cuts will be accompanied by changes to the dividend tax rate
• The Health and Social Care Levy (HSCL) of 1.25% due to be introduced from April 2023 will not now go ahead – and that the 1.25 percentage point uplift in National Insurance contributions (NICs) rates that was introduced in April 2022 will end on 6 November 2022.
• Changes to Stamp Duty Land Tax (SDLT), including doubling the nil-rate threshold from £125,000 to £250,000, increasing the level at which first-time buyers start paying SDLT from £300,000 to £425,000 and allowing first-time buyers to access this relief on property purchases up to £625,000

Further measures to encourage investment across the UK, cutting red tape and freeing businesses to grow include:

• an expansion of the Seed Enterprise Investment Scheme (SEIS) to help more UK start-ups raise higher levels of finance – 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. These increases will come into force from 6 April 2023
• 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. These changes will take effect from 6 April 2023
• the introduction of a new digital VAT free shopping scheme for non-UK visitors, as soon as possible
• a freeze on Alcohol Duty rates from 1 February 2023, and further details of the government’s reforms to alcohol taxation.

If you have any questions on the above, or are unsure how these measures will affect you, please do not hesitate to contact the office on 01827 54944.

Martin and Sandra