Are we missing something?
On Friday morning past, the new Chancellor of the Exchequer Kwasi Kwarteng delivered his first budget. Whilst it was widely speculated as being a mini-budget, the newspaper headlines since Friday have shouted out Maxi-Budget, Biggest Tax Giveaway in 50 years and UK Economy pushed back into Recovery mode.
Maybe it’s Monday-morning blues, but for us and most of our clients, the changes announced in last week’s reform programme are unlikely to make a huge difference for much of our local business community. Whilst the cut in national insurance rates, basic income tax rates and dividend tax rates are very welcome and will bring benefits in time, the wipe-out of the 45% tax rate will be felt by very few given the very small number of higher-rate tax payers in Northern Ireland.
Most of the changes announced last week, which we have summarised below, don’t come into play until later this year or early 2023. And they are not going to deliver a cash boost to business finances in the short term. With spiralling running costs for businesses across the board, and the news this morning that the pound has hit a record low against the dollar, there is real concern as to what the winter will bring.
So let us take this opportunity to remind all our clients and contacts – you must be on top of your cashflow. Put in place daily, weekly and monthly cash reporting systems so that you can see how your finances sit on a real time basis.
And if it’s getting tight, seek advice early. We are here to help.
Key points from the Mini-Budget announcement:
- Basic rate of income tax (currently 20%) will be cut to 19p in the pound from April 2023
- Higher rate of income tax (45%) is to be abolished also from April next
- The 1.25% rise in NIC will be reversed from 6th November
- Dividend tax rates will also be reduced by 1.25%
- The IR35 rules which affected how workers providing services via an intermediary (including single director service companies)) are to be scrapped
- Planned rise in corporation tax to 25% next year is cancelled
- Annual Investment Allowance – tax relief for businesses on plant and technology investment – to remain at £1m permanently, rather than reducing it £200,000 in March next year.
- Stamp duty bands greatly extended
- 0% limit increased to £250,000 of property’s value
- The threshold for first-time buyers is to be increased from £300,000 to £425,000. The value of the property on which first-time buyers can claim relief is to also go up from £500,000 to £625,000.
Should you have any queries on any of the above (or any other business matter), please do not hesitate to contact us on 028 8772 4697 or at email@example.com.
Gildernew & Co. Ltd make every effort to ensure the accuracy of the information herein. However, no reliance should be placed on any of the above without seeking independent professional accountancy, legal and/or financial advice.
Posted on September 26, 2022