HLAS

The 23 September mini budget announced the scrapping the Health and Social Care Levy and important changes to employee and employer National Insurance Contributions (NICs) that take effect in just six weeks’ time. Software developers are frantically working to make sure that payroll software is ready for the 6 November rate change. Unlike PAYE which generally works on a cumulative basis NIC for employees, who are not directors, is calculated weekly or monthly based on the limits and rates for that particular payroll period. This means that if the wrong NIC is calculated the error cannot be corrected in the [...]

Facing huge criticism and market turbulence following his announcement of a series of “growth” measures, Chancellor Kwasi Kwarteng has backtracked on his decision to abolish the 45p rate of income tax paid by people earning more than £150,000 a year. The proposal to scrap the rate had been criticised as unfair at this time of rising living costs. Following the mini budget markets reacted poorly and we saw a falling pound, higher interest rates, a collapse in mortgage products and the Bank of England stepping in to calm markets. Prime Minister Liz Truss has admitted yesterday she should have "laid [...]

Chancellors always like to pull rabbits out of the hat and make surprise announcements at the end of their Budget speech. Although rumoured in the run up to this mini-budget, the SDLT announcement was still a surprise as house prices have been steadily rising. Increases in mortgage rates are likely to slow the market so the SDLT announcements are designed to stave off a housing slump. Moving house has a multiplier effect on the economy as people tend to spend money decorating and furnishing their new home, with estimates suggesting that doing so drives additional spending worth about 5% of [...]

The Government has announced two changes to the tax advantaged Company Share Option Plan (CSOP) scheme. There is currently a maximum employee share option limit based on market value at grant of £30,000. This will be increased to £60,000 for any new options granted from 6 April 2023. Existing options are unaffected by this change. There will also be increased flexibility for share options granted from 6 April 2023 due to a removal of conditions around the class of shares used. The CSOP scheme is available to most UK trading companies as, unlike the Enterprise Management Incentives (EMI) share scheme, [...]

The new Chancellor has given his support to the tax-advantaged Enterprise Investment Scheme (EIS) and Venture Capital Trusts (VCT) and said he sees the value of extending them in the future. The vision is for the UK to be an entrepreneurial, share-owning democracy. In relation to the Seed Enterprise Investment Scheme (SEIS), the Treasury have confirmed that they are widening the criteria and will be allowing companies to raise £250,000 under the scheme, 66% more funding than previously. The SEIS currently provides unconnected investors with an income tax deduction of 50% of the amount invested, up to £100,000 a year. There [...]

The Government is in discussion with 38 local authority areas in England to set up ‘Investment Zones’ in specific sites within their area. Each Investment Zone (IZ) will offer generous, targeted and time limited tax cuts for businesses along with liberalised planning rules to release more land for housing and commercial development. These will be hubs for growth, encouraging investment in new shopping centres, restaurants, apartments and offices, and creating thriving new communities. The tax incentives under consideration are: 100% Business Rates Relief- on newly occupied or expanded business premises in IZs. 100% first year allowance - for companies with [...]

Businesses investing in plant and machinery will welcome the decision to make the £1 million Annual Investment Allowance (AIA) permanent. This has been extended several times and was scheduled to revert to just £200,000 from April 2023. Unlike the super-deduction, the AIA is available to unincorporated businesses as well as limited companies and the equipment does not have to be new.  

In the March 2021 Budget, Rishi Sunak announced that the rate of corporation tax would increase to 25% from 1 April 2023 where a company’s profits exceeded £250,000 a year, with the current 19% rate continuing to apply where profits were no more than £50,000 a year. There was also scheduled to be an effective 26.5% rate on profits between £50,000 and £250,000 a year. The UK would still have had a very competitive rate compared to other major trading countries as many of those are also increasing corporate tax rates. Nevertheless, the planned increase will not now go ahead [...]

Many director/shareholders of family companies pay themselves a small salary and take the rest of their “pay” in dividends. With dividends being free of NIC, this would have allowed them to avoid the extra 1.25% NIC charge when it was originally introduced. Consequently, the Government added 1.25% to the dividend income tax rates for 2022/23. Although the NIC increase is being abolished from 6 November 2022, the additional 1.25% will continue to be applied to dividends paid throughout 2022/23. From 2023/24 the dividend income tax rate will however revert to 7.5% where dividends fall within an individual's basic rate band [...]

It was on 7 September 2021 that we first heard about a new 1.25% Health and Social Care Levy, imposed on employers, employees and the self-employed, coming in from 2023/24. Further, this was to be effectively accelerated into 2022/23 by a 1.25 percentage point rise in National Insurance contributions (NICs). As expected, and despite changes to thresholds earlier this year, the increased NIC rates have resulted in a reduction in take home pay for many individuals. The Health and Social Care Levy has now been abolished and will not come in next April. Further, the Government is removing the associated [...]