Tax cuts central to mini-Budget

National Insurance

The 1.25% rise in NI rates that have applied since April 2022 will be axed from 6 November. The main rates will then be:

• Employees’ Class 1 (primary) - 12%
• Employers’ Class 1 (secondary) - 13.8%

Note. Additional NI payable by employees earning over the upper earnings limit of £4,189 per month (£50,270 per year) will also be reduced by 1.25% to 2% from 6 November. 
For 2022/23 there will be a transitional rate of 14.53% for Class 1A and 1B NI contributions, i.e. that paid by employers on taxable benefits in kind. 

Self-employed taxpayers will pay composite rates of Class 4 NI for 2022/23. The rates will be 9.73% on profits between £11,909 and £50,270 and 2.73% on profits above the upper limit. For taxpayers with annual earnings periods, e.g. directors, the rates will be 12.73% on earnings between £11,909 and £50,270, and 2.73% on higher earnings.

The Health and Social Care Levy, which was due to replace the April 2022 NI increases, has been abandoned.

Income tax
The basic rate of income tax will fall to 19% from April 2023, one year earlier than previously planned. The additional rate of 45% will be scrapped altogether, so the top rate will be 40% from April 2023. This is mirrored for tax on dividends paid on or after 6 April 2023. The additional rate of 39.35% will be scrapped leaving dividends for basic rate taxpayers chargeable at 7.5% and the higher rate at 32.5%.

Corporation tax

The increase in the main rate of corporation tax to 25%, due to apply from April 2023, has been cancelled. The main rate will remain at 19%.

The tax rate by companies who lend money to shareholders which was linked to the 1.25% NI rise in April 2022 will also be reduced.

Stamp duty land tax (SDLT)

With immediate effect, the nil-rate band has doubled from £125,000 to £250,000 for all residential property purchases. Plus, there is an immediate increase in First Time Buyers’ Relief from £300,000 to £425,000. First-time buyers will also see the maximum value of qualifying property increase to £625,000. 

Capital allowances

The temporary increase to the annual investment allowance has been made permanent, meaning it will remain at £1 million and not revert to £200,000 in April 2023.

Off-payroll working

The changes made to the off-payroll working rules from April 2017 and April 2021 will be reversed. From 6 April 2023 the responsibility for determining employment status will revert to the individuals doing the work. 

Other announcements

The seed enterprise investment scheme and company share option plan are being enhanced. The government is also consulting to introduce investment zones which will attract similar tax breaks as freeport sites.