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News & Insights

Mini Budget: Part Deux

18 October 2022
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A short article by Sutharman Kanagarajah and Jon Hanifan.

Those readers who remember the 1980s in the UK are likely to recall (fondly or otherwise) the “Hokey Cokey”. A repetitious song in which participants are encouraged, for example, to “put your whole self in, your whole self out” prior to a timely U-turn. Avid watchers of the UK’s recent “mini-budget” series may be left wondering what’s in and what’s out after many of the original proposals lasted only a few weeks.

What stays in


Well, not much. Employees and their employers will be pleased that the cuts to National Insurance contributions (“NICs”) are staying in.

In the current UK tax year (i.e., the year ending April 5, 2023, or 2022/23 for short), this means the reversal of a 1.25% NICs increase made earlier this same year and an abandonment of the Health & Social Care Levy (that was to apply for 2023/24 and beyond).

As noted below, and by contrast, the proposed reversal of the 1.25% increase in dividend tax rates has not been retained. This will therefore be a further factor when business owners compare employment tax rates with those applying to dividend income.

Planned changes to Stamp Duty Land Tax thresholds, plus first-time buyer measures, will also be made as proposed by the previous Chancellor.

While not garnering as much attention as those matters summarised above, we also note that the:

  • permanent £1m Annual Investment Allowance and
  • changes to the Seed Enterprise Investment Scheme and the Company Share Options Plan

will stay in.

What goes out


Corporation Tax (“CT”) is potentially one of the more (relatively speaking) confusing announcements, as the series of events started before the first mini-budget. Some commentators have referred to “Cancelling a rise” being scrapped. What is actually happening is the:

  • main rate of UK CT was to increase (from April 1, 2023)
  • mini-budget announced that this wouldn’t happen, and the rate should remain at 19%. Not a tax cut as such therefore, just abandoning a proposed increase
  • CT increase will happen, as originally planned. The proposed abandoning of the rate increase is therefore out/what is cancelled, and the mainstream rate of CT will increase to 25% from April 2023. Businesses paying more tax and tax advisors who had hoped they wouldn’t need to relearn marginal relief calculations will be among those left disappointed.

The proposed reduction in the basic rate of income tax (from 20% to 19%, from April 2023) is also out. This is delayed “indefinitely”/until economic conditions in the UK allow.

The reduction in the UK’s additional higher rate of income tax (which will stay at 45%) was already abandoned (by the previous Chancellor). Today’s announcement (by the current Chancellor) followed suit by scrapping a 1.25% cut to the highest rate of income tax applying to dividend income. The decision to scrap the additional rate applying to dividend income (from April 2023) had already been reversed.

One of the most surprising, although not necessarily headline grabbing, elements of the mini-budget was the so-called “abolition of IR35”. The abolition of IR35 was never actually proposed. It was simply proposed to move the decision-making process (as to whether the disguised employment rules should be invoked) away from the client/engager and back to the intermediary. In effect, taking the position back to pre-April 2021 in the private sector. The Chancellor announced today that this change is out, and the rules will remain as they stand.

What happens next


The next instalment in this series is expected to be in the form of the Medium-Term Fiscal Plan on October 31. This could include further changes to the UK’s fiscal policy.

While UK businesses, and individuals, will welcome some of the measures announced on October 17, they will nervously await further changes and crave more certainty than has been exhibited of late.

Sutharman Kanagarajah
Head of Tax

Jon Hanifan
Business Development Director

If you have any queries in respect of this article, please do not hesitate to contact Centralis.