The Chancellor has today delivered the Government’s ‘mini budget’ announcing a raft of tax cuts for employers and employees.
Income Tax
From April 2023 the basic rate of income tax (payable by those earning between £12,571 and £50,270) will be cut from 20% to 19%, a year earlier than planned.
The 45% tax band, payable by those earning over £150,000 will be abolished altogether from April 2023 and the 40% higher rate will then be applied to all those earning over £50,270.
National Insurance Contributions
From 6 November 2022 the 1.25% rise in national insurance contributions for employers and employees that was introduced in April 2022 will be cancelled.
The Health and Social Care Levy that was due to become payable in April 2023 will also be abolished.
Corporation Tax
The proposed increase to corporation tax that was due to come into effect from April 2023 will also be scrapped, meaning the rate will stay at 19%, rather than 25%.
IR35 Rules to be Scrapped
The Treasury have also confirmed that the IR35 rules will be abolished from April 2023, for both private and public sector employers. This means that individuals will return to being responsible for determining their correct employment status and paying tax and national insurance contributions accordingly. The Government say that this will free up time and money for businesses that engage contractors which they can better utilise elsewhere in their businesses.
Banker Bonus Cap Abolished
The cap that previously restricted bonuses paid to bankers to no more than twice their annual salary has also been scrapped.
Energy Support
The Energy Bill Relief Scheme will come into effect from 1 October 2022 and will give discounted gas and electricity prices for businesses for six months.
For advice on how any of these changes affect you or your business please contact a member of the Employment Team on 0345 646 0406 or fill in our online enquiry form to discuss how we might be able to help.