UK fiscal announcement 2022

UK fiscal announcement - 23 September 2022

At today’s UK fiscal event the Chancellor made several announcements as part of the UK Government’s ‘Growth Plan’. A summary of the Chancellor’s key tax-related announcements can be found below.

Corporation tax

• The planned increase in the main rate of corporation tax to 25% has been cancelled, as expected.
• The associated increase to the diverted profits tax rate and the reduction in the banking surcharge rate have also been cancelled, however the previously announced increase in the banking surcharge allowance to £100 million will go ahead as planned.
• Some of the technical provisions for the super-deduction will be amended as a consequence of the corporation tax rate being retained at 19% from 1 April 2023 to ensure that the relief continues to operate as intended.
• At this stage we are still waiting for clarity on the legislative timetable which will determine when these changes to rates will be regarded as being ‘substantively enacted’ for accounting purposes.
• Annual Investment Allowance will permanently remain at £1 million.
• The UK Government will continue with its review and planned reforms of R&D tax reliefs, including bringing pure mathematics research, data and cloud computing into scope and refocussing the reliefs towards innovation in the UK. Any further reforms will be announced at future fiscal events.

Employment and personal taxes

• The additional rate of income tax (45% rate) set by the UK Parliament will be scrapped from 6 April 2023
• The basic rate of income tax set by the UK Parliament will be cut by 1p from 20% to 19% from April 2023, bringing forward previous Chancellor Rishi Sunak’s planned cut by one year. For both these changes it is not yet known if there will be any consequential changes to the rates set by the devolved administrations of the UK.
• As confirmed on 22 September by the UK Chancellor, the April 2022 1.25% increase in national insurance contributions will be reversed from 6 November 2022 and the upcoming Health and Social Care Levy has been scrapped.
• The planned increases to dividend tax rates will also be scrapped from 6 April 2023.
• The 2017 and 2021 reforms to the off-payroll working rules (also known as IR35) will be repealed from 6 April 2023. From this date, the assessment obligation will no longer apply to the end user of the services and instead workers providing their services via an intermediary will once again be responsible for determining their employment status and paying the appropriate amount of tax and NICs.
• The limit on the maximum value of shares (measured on the date of grant) that can be subject to tax-advantaged Company Share Option Plan (CSOP) options will double to £60,000, and the current restrictions on the type of shares that can be subject to CSOP options will be eased from 6 April 2023.
• The annual investor limit for the Seed Enterprise Investment Scheme will be doubled to £200,000 from 6 April 2023.
• There has been no announcement regarding the income tax personal allowance and higher rate threshold freeze. This will continue until 2025/26, subject to any future announcements.

Property taxes

• From 23 September 2022, the UK Government will increase the threshold above which Stamp Duty Land Tax (SDLT) must be paid on the purchase of residential properties in England and Northern Ireland from £125,000 to £250,000. The UK Government will also increase the threshold at which first-time buyers begin to pay residential SDLT from £300,000 to £425,000, and the maximum value of a property on which first-time buyers relief can be claimed will also increase, from £500,000 to £625,000.

VAT and indirect taxes

• A new VAT-free digital shopping scheme for non-UK visitors to Great Britain (no implementation date as yet) will enable them to obtain a VAT refund on goods bought in the high street, airports and other departure points and exported from the UK in their personal baggage.
• Green levies have been suspended for two years.

Other announcements of note

• New UK ‘investment zones’ have been announced, in which businesses will be able to benefit from tax reliefs, planning liberalisation and wider support for the local economy. Specified sites in England will benefit from a range of time-limited tax incentives over 10 years including business rates and stamp duty reliefs, zero-rated Employer’s NIC, and enhanced capital allowances.
• The cap on bankers’ bonuses will be abolished, as widely trailed recently.
• Later this autumn the UK Government will bring forward further proposals for deregulation including a plan for repealing EU law for financial services and replacing it with new UK rules.
• The Office of Tax Simplification (OTS) will be abolished with HM Treasury and HMRC taking on its mandate to focus on simplifying the tax code. The OTS expects to publish its report on the taxation of property income in October, and will continue to gather evidence on its hybrid and distance working review ahead of its closure, the precise timing of which will be determined by Royal Assent to the Finance Bill and is therefore uncertain.

In summary, whilst there are some measures announced that businesses in the Crown Dependencies may want to consider further, there are no measures directly applicable to businesses in the Crown Dependencies, unless they have UK operations.

Please feel free to contact us if you want to discuss any of these points further.