Following the recent appointment of the new Prime Minister, Liz Truss. There has been a cabinet reshuffle with Kwasi Kwarteng appointed Chancellor. Following his appointment, the new Chancellor announced a ‘Mini-budget’ which took place this morning. This was one of the biggest tax-cutting budgets in recent years.
Below we highlight 5 key tax changes announced by the new Chancellor.
Corporation Tax
In April 2023, Corporation Tax was due to increase from 19% to 25% for all but the smallest companies. However, the Chancellor announced that this increase will no longer be going ahead and that Corporation Tax will remain at 19%.
National Insurance
The 1.25% increase in National Insurance introduced in April 2022 will now be reversed from 6th November 2022. Similarly, the Health and Social Care Levy which was due to be introduced next April instead of the 1.25% increase in National Insurance has been abandoned. It has been announced that funding for health and social care will now come from general taxation.
Income Tax
In the March Budget, the former Chancellor Rishi Sunak announced that he would reduce the basic rate of Income Tax from 20% to 19% in 2024. The new Chancellor has announced that this Income Tax cut will be brought forward by 12 months and will be effective from April 2023. The Government has predicted that this will save basic rate income taxpayers £170 per year on average.
Stamp Duty Land Tax
Changes to Stamp Duty Land Tax thresholds were also announced today. First-time buyers will pay no Stamp Duty Land Tax on the first £425,000, this has increased from £300,000. Furthermore, those that are not first-time buyers will pay no Stamp Duty Land Tax on the first £250,000, increased from £125,000, in respect of residential property purchases. It is important to note that these changes to Stamp Duty Land Tax are effective from today.
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