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The Government unveiled its Growth Plan on Friday 23rd September, with a string of tax cuts at the heart of measures designed to stimulate the economy.
The new Chancellor of the Exchequer, Kwasi Kwarteng, announced some of the most significant tax changes seen in a generation as well as significant plans to overhaul business regulation and the repeal of the ‘IR35’ off payroll rules for business.
Read on for our comprehensive summary of the key talking points from the Chancellor’s Growth Plan.
1.25% National Insurance rise reversed
The 1.25% increase in National Insurance, introduced by former Chancellor, Rishi Sunak, will be reversed from 6th November for employees and employers. For further details see our article here.
Basic rate income tax cut brought forward
A cut to the basic rate of income tax from 20p to 19p has been brought forward 12 months. The basic rate income tax will become 19% from April 2023. This will be applicable to non-dividend and non-savings income for taxpayers residing in England, Wales and Northern Ireland.
Additional rate of income tax abolished
The additional rate (45%) of income tax is to be abolished from April 2023 for taxpayers residing in England, Wales and Northern Ireland. The Scottish Government will receive funding to allocate as they see fit for both the basic and additional rates of income tax. For further details about income tax cuts please see our article here.
Planned corporation tax increase scrapped
A proposed increase in the corporation tax rate to 25% has been scrapped by the Chancellor, opting to maintain the rate at 19%. For further details see our article here.
Stamp Duty Land Tax (England & Northern Ireland only)
From 23rd September 2022, the government will increase the threshold above which Stamp Duty Land Tax (SDLT) must be paid on the purchase of residential properties in England and Northern Ireland from £125,000 to £250,000.
In addition, from 23rd September 2022, the threshold at which first- time buyers begin to pay residential SDLT will increase from £300,000 to £425,000, and the maximum value of a property on which first-time buyers’ relief can be claimed will also increase, from £500,000 to £625,000.
Repeal of IR35 reforms in 2017 and 2021
The rules regarding off-payroll working – known as IR35 – are changing. Reforms to IR35, which have sought to make employers responsible for determining the employment status of contractors, are being repealed from 6th April 2023. From this date, those working via intermediaries will again be responsible for confirming their employment status and paying an appropriate level of NICs and income tax. For further details see our article here.
Annual Investment Allowance maintains £1m threshold
In a bid to encourage businesses to invest and grow, the government has opted to make the temporary £1m level of the Annual Investment Allowance (AIA) permanent. This threshold was set to expire in March 2023. In doing so, firms can deduct all the costs of eligible plant and machinery up to £1m.
Other changes affecting companies
The Government also announced an increase in the thresholds for the Seed Enterprise Investment Scheme (SEIS) and Company Share Options Plans (CSOP’s).
From April 2023, companies will be able to raise up to £250,000 of SEIS investment (increased from £150,000) to enable more companies to use SEIS. The gross asset limit will be increased to £350,000 and the age limit from two to three years. To support these increases, the annual investor limit will be doubled to £200,000.
From April 2023, qualifying companies will be able to issue up to £60,000 of CSOP options to employees which is double the current £30,000 limit. Other restrictions on share classes within CSOP will be eased, better aligning the scheme rules with the rules in the Enterprise Management Incentive scheme and widening access to CSOP for growth companies.
New Investment Zones
The Government has commenced plans to launch new Investment Zones in collaboration with devolved administrations and local councils across the UK. Investment Zones are designed to accelerate growth, with the addition of tax incentives and a liberalisation of planning permission for key infrastructure projects. The tax reliefs “under consideration” are described as “time-limited” for a period of ten years.
These reliefs include 100% relief on business rates for newly occupied commercial properties. Small firms will also see enhanced capital allowances of 100% for the first year against eligible expenditure on plant and machinery assets for use within Investment Zones.
Employers will also benefit from a zero-rate on Employer NICs for new employees working on-site within an Investment Zone for at least 60% of the working week. This covers salaries up to and including £50,270 per annum. Salaries above this threshold will be charged at the level’s usual rate.
Alcohol duty reform
The Government will freeze the alcohol duty rates from 1st February 2023 to provide additional support to the sector.
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