Emergency Budget - Tax Highlights

Chancellor Kwasi Kwarteng set out his Growth Plan in the Emergency Budget statement delivered to the House of Commons today; tax-related announcements are summarised below and went further than anticipated.

Emergency Budget - Tax Highlights
  • Stamp Duty Land Tax – no SDLT on the first £250,000 of the cost of residential property purchases from today 23 September 2022 (increased from £125,000)
  • Income Tax – the Basic Rate of income tax will be cut to 19% (from 20%), effective 6 April 2023
  • Income Tax – the 45% Additional Rate and 38.1% Dividend Additional Rate, on   income over £150,000, will be abolished from 6 April 2023, resulting in a top 40%  Higher Rate of income tax (and 32.5% Dividend Higher Rate)
  • Annual Investment Allowance – permanent 100% relief on up to £1M of qualifying plant and machinery expenditure (AIA threshold was due to fall to £200,000 in April 2023)
  • National Insurance Contributions - the 1.25% rate increase which started in April 2022 has been reversed; NIC rates will reduce to 2021-22 levels from 6 November 2022; Health and Social Care levy scrapped
  • Income Tax - the parallel 1.25% Dividend income tax rate increase will also be    reversed, from 6 April 2023: dividend tax rates will revert to 2021/22 levels (7.5% Basic Rate, 32.5% Higher Rate – with the abolition of the Additional Rate 38.1%)
  • Corporation Tax - the planned rate increase in April 2023 to 25% has been cancelled and the rate will remain at 19%
  • IR35 (off-payroll) rules - previous changes (2017 and 2021) repealed from 6 April 2023
  • Stamp Duty Land Tax – nil-rate threshold for First Time Buyers’ relief increases to £425,000 (from £300,000), on properties costing up to £625,000 (from £500,000), effective 23 September 2022
  • NIC - threshold increase from July 2022 (equating to income tax threshold of £12,570) has been retained
  • Investment Zones – plans announced to establish zones in 38 English local authority areas with 100% business rates relief; first year enhanced relief for plant & machinery expenditure; 20% Enhanced Structures and Buildings Allowance; 0% Employer NIC on new employee earnings up to £50,270 annually; and SDLT relief on land acquired for residential/commercial development. Northern Ireland Investment Zones to be delivered in partnership with the devolved administration
  • Investment Reliefs - proposed enhancement of SEIS, EIS and VCT, further details to follow
  • VAT - VAT-free shopping for overseas visitors
As many of the announcement are subject to legislation, the details may change during the legislative process and should therefore be kept under review. For an in-depth look at the announcements, our Budget Analysis publication can be downloaded HERE