The UK’s Mini Budget was recently revealed and it’s comprised of a package of policies aimed at boosting the UK economy through tax deductions. When the announcement was made by the Chancellor, it was revealed that it was not an official budget statement, hence, why the term mini-budget has been circulating in the media. The Mini Budget is worth £161bn, and it is the UK’s largest package of tax cuts to date since 1972!
The Annual Investment Allowance (AIA) was permanently raised to £1 million, instead of the £200,000 budget which was set for April 2023. If you are planning to purchase plant and machinery, this section of the Mini Budget provides a 100% Capital Allowance, covering the investment needs for the business’s qualifying plant and equipment. This is an important construct of the Mini Budget, as it was created to encourage the development of businesses.
Contact us for support in applying for Capital Allowance.
In case you didn’t know, the IR35 is the official name of the off-payroll working rules, which have been introduced to both the private and public sectors in 2017, and 2020. It was initially introduced to allow someone to be accurately identified as an individual paid on a PAYE basis or self-employed through a complex system.
This September Mini Budget revealed that the off-payroll working rules are no longer applicable, and this decision is estimated to cost the UK government £1.1 bn in the tax year 2023-2024. Ending the off-payroll working rules would open a door for tax avoidance, hence increased tax investigations which is why at Elena Meskhi & Co., we encourage compliance with HMRC guidelines and regulations. Additionally, we ensure our clients are tax efficient at all times. In the event of a tax investigation, we take all the stress and hassle from our clients, with our team of experts who have a 95% success rate in handling tax investigations.
This latest change would impact nearly 700,000 individuals as it becomes active in April 2023-24. Meanwhile, the additional rate taxpayers would only be accounted for 36% of their income tax liabilities from 2022-23. The unexpected reductions are a means of encouragement by the UK government for entrepreneurs and business owners.
Moreover, the £500 tax-free allowance on income savings that was given to higher rate taxpayers, will now become available to additional rate taxpayers according to the Mini Budget 2022.
This decision was a result of the cancellation of the increase in national insurance. Additionally, both the ordinary and upper rates of dividend tax would be reduced to 7.5% and 39.35%. To add to these reductions would be the reversed increase (1.25%) in dividend tax rates that would have commenced in April 2023. This section of the mini-budget will benefit nearly £3 million taxpayers!
Contact us for more information on how your dividends would be impacted.
More great news for taxpayers in the UK. This small change in the basic income tax rate (1%) would cost the Exchequer £5bn every year!
