The new chancellor Jeremy Hunt has today announced a reversal to most of the tax cuts that were being rolled out following the mini budget three weeks ago.
- The corporation tax cut has been repealed and will revert to the format that Rishi Sunak had put in place. This will mean that companies with profits below £50,000 will have a corporation tax rate of 19% and companies with profits above £250,000 will have a corporation tax rate of 25%. Those with profits between these two levels will have a marginal tax rate.
- The proposed tax cut on income tax to 19% has been reversed. And it will remain at 20% indefinitely. This means that the planned cut that Rishi Sunak had announced in March to cut income tax in April 2024 will no longer go ahead.
- The energy price guarantee which was meant to be in place for 2 years will now be until April 2023 at which point it will be reviewed.
- They will no longer be proceeding with the reversal of the off-payroll working reforms (IR35) that were introduced in 6th April 2017 and 6th April 2021.
- They will no longer be proceeding with the freeze on alcohol duty rates.
- The proposed abolition of the 45% additional rate of tax had already been reversed in a previous announcement by Kwasi Kwarteng.
- They will however be keeping the stamp duty changes so no stamp duty will be paid on a property worth less than £250,000.
- And the abolition of the health & social care levy will go ahead. This means that the rate of National Insurance will drop by 1.25% from 6th November.
- It has been stated that the dividend tax cut will not go ahead. This increase was the equivalent of the health and social care levy of 1.25%, and had planned to be removed from 6th April 2023, but this will no longer go ahead which means that the basic rate of dividend tax will stay at 8.75%, and 33.75% for higher rate tax payers.
This is an ever evolving situation and the details have only been announced this morning. We will keep you updated if there are further developments.
If you are concerned over the recent changes announced, please feel free to get in touch and we’ll be happy to speak with you about how these changes may affect your business.