The Emergency Mini Budget Breakdown

The Emergency Mini Budget, termed as ‘the Growth Plan’, was announced on 23rd September 2022 and it included many important updates. The announcements touched upon several areas including Business taxes and schemes, Personal taxes, Investment zones, SDLT and much more.

With the recent introduction of MTD for ITSA and now the mini-budget, the finer details of these changes can be hard to keep track of. The experts Paul Alpin OBE and Paul Lodder FCCA have hence summarised the key takeaways for accountants and bookkeepers from the Emergency Mini Budget so you’re never out of the loop. 

Read on to find out more or click here to watch the full webinar.

Business taxes

The Annual Investment Allowance (AIA) has been permanently set at £1m starting April 2023. The AIA has fluctuated quite often over the last few years which often made things tricky for accountants. It being set to a permanent value for the foreseeable will definitely be a welcome change.

Despite the various talks concerning the changes in Corporation tax rates, the planned rate increase has been cancelled and maintained at 19% from April 2023. This is a great step towards easing off some pressure on businesses as they gear up for the tough times ahead. 

Bank CT surcharge will be maintained at 8% and the allowance set at £100m from April 2023. Additionally, the banker’s bonus cap will be removed. 

Lastly, with regards to R&D further reviews are to take place and we expect more insights to be shared in the due course.

Business schemes

The limits for SEIS have been increased from April 2023. Instead of the previous £150,000 companies can now raise upto £250,000 in SEIS. The gross asset limit has also been increased to £350,000 and the annual investor limit doubled to £200,000.

With regards to CSOP, the limit of £30,000 per individual at the time of issue has been around for a long time and having that doubled up to £60,000 will make CSOP a bit more attractive.

These updates are sure to have a positive impact and encourage more investments moving on.

Personal taxes

The temporary 1.25% increase in NICS has been reversed starting from 6 November. This has been the third change in NI this tax year.

The 1.25% increase in the dividend tax too has been reversed. However, this will not be applicable before the start of the next tax year i.e., April 2023. Based on this reversal, it could be useful to declare dividends in the 2023-24 tax year as opposed to the ongoing 2022-23 tax year.

A basic rate reduction was announced for income tax. Reducing from the current 20% to 19% starting April 2023. The major update regarding income tax was for those earning above £150k, the additional rate income tax has been removed effective April 2023. 

Another update mentioned in the mini-budget concerning personal taxes was the cancellation of the Health and Social Care Levy.

Investment Zones

Investment zones are a fairly new concept in terms of the announcements that were made. Several incentives are currently under consideration to help drive investments, employment and businesses coming in. The incentives that are being considered include business rates, capital allowances, enhanced SBA, NICS and SDLT.

There were other updates regarding SDLT as well. These changes came in from the day of the mini budget itself i.e. 23 September 2022. These are changes aimed at supporting first time buyers. 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. Secondly, the threshold above which SDLT is paid on residential property has been increased from £125,000 to £250,000 for not just first-time buyers but everyone buying.

Other updates

Some of the other updates that were touched upon in the mini-budget include:

  • Off payroll working:  Repealing these reforms from April 2023
  • Alcohol duty:  Frozen for one year from 1 February 2023
  • VAT free shopping for non-UK visitors: consultation to take place
  • Universal credit: increasing the Administrative Earnings Threshold to 15 hours a week for an individual claimant – effective January 2023.  (NB increase from 26th September from 9 hours to 12 hours)
  • Energy Price Cap
  • Energy Bill Relief Scheme: 6 month support package

With so many crucial updates and announcements, the mini-budget was in fact not so ‘mini’. We will be seeing the impact of these changes in coming months and in the next tax year.

If you’re interested in finding out more, watch our experts Paul Aplin OBE and Paul Lodder FCCA as they dived deep into these updates at the Emergency Budget Breakdown webinar. They covered these changes in detail, discussing the knock on effects and implications for accountants and bookkeepers. Click here to watch the webinar on demand.