Mini-budget 2022 Overview

The Chancellor announced significant tax changes and cuts on the 23rd of September 2022 with some of them already starting this year.

We have listed below a summary of the main employment and workplace pensions announcements:

Income Tax

From April 2023, the basic rate income tax will be cut by 1%, from the current 20% to 19%.

A one-year transitional period will be introduced for tax relief at source pension schemes allowing them to claim tax relief at the 20% rate.

The additional income tax rate (45%) will also be removed from April 2023.

National Insurance Contributions

The National Insurance increase of 1.25% introduced this year will be reversed effectively from the 6th of November 2022.

The planned Health and Social Care Levy that would replace the above NIC increase has also been cancelled.

Dividends

The 1.25% increase in the dividend tax rates will be reversed from April 2023.

The dividend additional rate will also be removed, meaning that:

• the dividend ordinary rate of 8.75% will reduce to 7.5%

• the dividend upper rate of 33.75% will reduce to 32.5%

• the dividend additional rate will be removed

Pension charge cap

At the moment Auto-Enrolment pension schemes have a charge cap of 0.75% which limits how much pension providers can charge workers who have been automatically enrolled into their workplace pensions’ default fund.

The government has brought forward draft regulations to reform the above pensions regulatory charge cap to give defined contribution pension schemes the clarity and flexibility to invest in the UK’s most innovative businesses and productive assets creating opportunities to deliver higher returns for savers.

Corporation Tax

The planned increase in corporation tax to 25% from April, has also been cancelled. This means that the current corporation tax rate of 19% will remain.

IR35

The IR35 reform for off-payroll workers introduced in 2017 and 2021 will be revoked from April 2023. From the 6th of April, the responsibility for determining employment status and paying the appropriate tax will fall back on the personal service entity.

Investment Zones

Investment zones will be introduced with specific tax benefits including 100% business tax relief, and zero rates on employer NIC on new employees earning up to £50,270 per annum, among others.

Annual Investment Allowance

The Annual Investment Allowance limit which was due to reduce from £1m to £200,000 from April 2023, will not happen.

Other changes

The Government also announced other changes to improve the cost of living including:

• The threshold to pay Stamp Duty L T (SDLT) on residential properties will increase from £125,000 to £250,000. The rate for first-time buyers will also increase to £425,000.

• The alcohol duty will be frozen from February 2023.

• From April 2023 companies will be able to raise up to £250,000 of Seed Enterprise Investment Scheme (SEIS) investment Reforms will be made to Company Share Option Plans (CSOPs) to align them more with EMI schemes.

Keep up to date with Husky

With Husky you don’t need to worry about any of the changes as we will manage your workplace pension and Salary Exchange schemes on your behalf, ensuring you are always up to date with any legislation changes.

If you are an employer, let Husky manage your pension so that you can focus on your business.

Book a call with our team to see how we can help.