What the mini budget means for your business

If you’re anything like us, you’ve probably found it hard to escape the latest news from the mini budget. The Chancellor, Kwasi Kwarteng, delivered his first mini-budget on Friday 23rd September 2022, with a whole lot of changes affecting individuals and businesses. So whether you’re employed or run a business of your own - listen up!

Some of the changes take immediate effect while others are planned for 6th November 2022 and April 2023.

What’s new for income tax?

The basic rate of income tax was initially planned to reduce from the current rate of 20% to 19% from April 2024, but this is now being brought forward to April 2023 (YAY!).

The additional tax rate of 45% on income above £150,000 has been abolished - income above £150,000 will now be taxed at 40% - which some people say is controversial and lining the pockets of the rich - we’ll let you make your mind up.

Corporation tax

This is a BIG one for limited companies - The planned rise of corporation tax to 25% from April 2023 has been cancelled. So, corporation tax remains at 19% for now. This means that as a general rule of thumb, if your profits are over £35K per year, it’s financially beneficial to be a limited company (get in touch if you’re unsure whether to form a company or not).

IR35 regulations

The government introduced laws back in 2017 to make public sector bodies responsible for determining if a contract fell within IR35 legislation or not. This meant that most public sectors just stated that all contracts were to lie under IR35. In 2021, the law was extended to the private sector (nightmare!) meaning many freelancers were finding themselves with less in their pockets each month, having had PAYE/National Insurance deducted from their fees.

The Chancellor has announced the repeal of the laws passed in 2017 and 2021 from April 2023. This is a huge change as it means owners of limited companies from April 2023 will be responsible for determining if the contract falls within IR35 and the end clients will no longer need to withhold any taxes. We can help with contract reviews so if you’re unsure whether your new contract falls under IR35 - let us help.

Annual investment allowance (buying assets)

The temporary introduction of the £1 million allowance has been made permanent so the planned reduction to £200,000 in April 2023 is being removed. This is unlikely to affect you to be quite honest unless you’re spending that kind of dollar on equipment each year.

Stamp duty reduction

The stamp duty threshold has been doubled from £125,000 to £250,000 and for first-time buyers, it will be £425,000, so if you’re looking to buy a property soon, this is welcome news! If you need any help with finding a mortgage broker, a reference for your lender or anything else please reach out.