The recent announcements by then Chancellor Kwasi Kwarteng regarding tax and NI cuts, changes to proposed corporation tax rates etc were welcomed by some, but it threw the financial markets into meltdown.
The announcement that the additional tax rate of 45% for those with income over £150,000 was to be cut to 40% was the first proposal to be reversed in one of many U-turns and the 45% rate now stays!
The proposal to increase corporation tax from 19% to 25% which has been on the table for some time was taken out – good news for many limited companies, and the abolition of the 1.25% increase in NI that took effect earlier in the tax year was abolished – good news for employers and employees, but bad news for the software industry having to implement a third change to the system in the 2022/23 tax year!
However, the current Chancellor (at the time of writing!) Jeremy Hunt, within a few days of taking up office, put back in the corporation tax increase. The 1.25% reduction from November though does stay.
There were other proposed changes and subsequent U-turns – and there is a further statement by the Chancellor on 31 October and probably another budget announcement around March next year, and everything could change again!
Tax planning around dividends, remuneration etc is therefore very much a moving goalpost, more so than ever before.
Rest assured we will be busy “crunching numbers” behind the scenes and will advise you accordingly based on the known information available at the time! Please feel free to contact us if you have any questions about these recent changes.
