A summary of the main tax changes that will impact the liability of individuals and business owners from April 2023 are:
• A reduction in the Income Tax basic rate from 20% to 19%.
• The abolition of the 45% additional Income Tax rate.
• The cancellation of the proposed increase in Corporation Tax. The rate will now remain at 19%.
• The withdrawal of the Health and Social Care Levy of 1.25%.
• The tax rates on dividend income for 2022-23 were increased to mirror the increases in NIC rates (1.25 percentage points). In line with the withdrawal of the Health and Social Care Levy from April 2023 and the abolition of the 45% Income Tax Band from the same date, the rates of dividend tax from April 2023 will be:
a.The first £2,000 of dividends will remain tax-free.
b.Dividends that form part of the basic rate Income Tax band will taxed at 7.5%
c. Dividends that form part of the higher rate Income Tax Band will be taxed at 32.5%.
• The Chancellor announced a permanent increase in the SDLT nil rate band to £250,000 (from £125,000) with immediate effect from the date of his announcement, 23 September 2022.
• Prior to the announcement, no SDLT was payable for first-time buyers making a purchase of up to £300,000. This limit has now been increased by £125,000 with immediate effect to £425,000. The first-time buyer’s relief also increases the nil-rate threshold to £425,000 (£300,000 prior to 23 September 2022) for first-time buyers of properties costing up to £625,000 (£500,000 prior to 23 September 2022). There is no relief available for first-time buyers spending more than £625,000 on a property. There are a number of requirements that must be met in order to qualify for the relief.
• The present Annual Investment Allowance that provides a 100% tax deduction for qualifying capital investments is now permanently capped at expenditure of £1m. This cap was due to reduce to £200,000 from 31 March 2023.