The government confirmed last week that we can expect an Autumn Budget from the new Chancellor on 17 November.
The Government’s proposed tax regime changes
In the meantime, it has clarified that many of the previously announced tax changes (which we summarised in our October article) will not now go ahead. In summary:
- The current 45% additional rate of income tax will be maintained indefinitely.
- The proposed reduction in the basic rate of income tax from 20% to 19% (which was originally intended to take effect in April 2024) has been postponed indefinitely.
- The reversal of the 1.25% increase in National Insurance contributions will proceed as an announced in the Kwarteng mini-budget, on 6 November, and the Health & Social Care Levy will no longer be introduced in April 2023.
- Corporation tax will rise from 19% to 25% in April 2023, as originally proposed.
- The repeal of the recent raft of IR35 reforms introduced in 2021, which was intended to take effect from 6 April 2023, will not now go ahead. Instead, the current off payroll working rules will continue. Practically, that means that end user employers will retain responsibility for determining the deemed employment status for tax purposes of contractors that they engage through personal service companies. If a contractor is within scope of the current off-payroll rules, the fee payer (normally the employer) must ensure that they continue to account to HMRC for the appropriate income tax and NICs that are payable.
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