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Mini-Budget – what do the changes mean for businesses?

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The Mini-Budget had more changes than we could have anticipated, with the overall aim to grow the economy by giving the biggest tax cuts in 50 years.

The main changes for businesses are summarised below.

Corporation tax

The planned increase in the Corporation Tax rate to 25% from April 2023 has been scrapped, remaining at its current rate of 19%.

Capital allowances – AIA

The 100% Annual Investment Allowance on plant and machinery capital expenditure will remain permanently at £1 million, rather than fall to £200,000 in April 2023 as previously planned.

National Insurance and dividends

The National Insurance increase of 1.25% that was brought in earlier this year will be reversed from 6 November 2022, and the associated dividend rates increase will be reversed next April. In addition, the planned Health and Social Care Levy will no longer be introduced next year.

This will apply to NI for employees, employers and the self-employed. For those in control of when they can receive their income, it may be worth delaying any bonuses until after 6 November and dividends until after April 2023.

Investment zones

The Chancellor confirmed 38 local authorities in England are in talks to create “investment zones” with tax breaks for businesses. These local authorities include councils such as South Yorkshire, West Yorkshire and Derbyshire.

Areas with investment zones will benefit from the following:

  • Time-limited tax incentives
  • Accelerated development to deliver growth and housing
  • Mayoral Combined Authorities hosting investment zones will receive support for local growth through a single settlement in the next spending review period.

Specified sites in England will benefit from a range of time-limited tax incentives over a 10-year period. The following are under consideration:

  • Business rates relief of 100% on newly occupied business premises and certain existing businesses if they expand in investment zones in England. Councils hosting investment zones will receive 100% of the growth in business rates over an agreed baseline for 25 years
  • 100% first year allowances on plant and machinery for use in tax sites
  • 20% structures and buildings allowances on non-residential properties, a significant increase on the current 3% rate
  • For new employees working in the tax site at least 60% of their time, Employer’s NICs will be zero-rate on earnings up to £50,270, and the usual rates above this
  • Full relief from stamp duty land tax on land and buildings bought for commercial use or development, and those bought for new residential development.

It is also intended that zones will be agreed with Scotland, Wales and Northern Ireland in due course.

Energy bill relief scheme

From the six months starting 1 October 2022, the Government will run a temporary scheme in Great Britain to support non-domestic energy users including businesses, voluntary sector organisations such as charities, and public sector organisations such as schools, care homes and hospitals. Discount on wholesale gas and electricity prices will be automatically applied to bills. The scheme will be reviewed in three months’ time to establish whether support should continue after March 2023.

A similar scheme will run parallel in Northern Ireland.

Seed enterprise investment scheme

From April 2023, the amount that companies will be able to raise in SEIS investment has increased two thirds, up to £250,000. The gross asset limit will also rise to £350,000 and the age limit to three years. The annual investor limit will double to £200,000.

Company share option plan

Also from April 2023, the company share option plan (CSOP) limit that allows businesses to offer share options to employees is being doubled from £30,000 to £60,000.

Join BHP Tax Partner Chris Humphreys this Tuesday 27 September at 8am for a review of all the changes announced in the Mini-Budget. Book your place here: Webinar: Mini-Budget Roundup – BHP, Chartered Accountants