2022 Mini Budget Review – part 2

Well that was an interesting couple of weeks. For anyone not following the news, the new chancellor Jeremy Hunt, has reversed nearly all of the main tax cuts announced by his short lived predecessor. The only things he’s left unchanged are the cancelling of the increase in national insurance by 1.25%, and increases to stamp duty thresholds.So to summarise where we are now (spoiler, mostly back to where we were at the start of the month) –

Corporation tax will increase from 19% to 25% from April 23 for annual profits over £250,000. Companies with profits up to £50,000 will continue to be taxed at 19%. Profits between £50,000 and £250,000 will be subject to a complex marginal rate calculation, with a resulting effective tax rate exceeding 25%.

Income tax basic rate to stay at 20% , 45% top rate retained. With inflation at 10% and the personal allowance and rate bands frozen this effectively represents a tax increase in all but name. Wage inflation will mean people’s earnings are pushed into progressively higher tax brackets over the next few years.

National insurance will reduce by 1.25% from 6 November, reverting to the levels in place on 5 April 22.

Dividend tax however will not be cut by 1.25% and so will remain at the same levels in place on 5 April 22.

IR35 rules to stay the same as previously. The proposed reform of the regime to make it simpler to navigate have been scrapped. This will mean end users will still have ultimate responsibility for deciding the status of contractors.

oh and the energy bills support package is now going to last for only 6 months, presumably to give the government time to come up with a more targeted (i.e less expensive) scheme.

that’s it for now, but don’t bet on more tax increases in the near term, will keep you posted,