Reversals, U-turns and Bad News for Your Tax Bill

Kirsty Young News, Tax

Over the past few weeks since we’ve had the fabled ‘mini budget’, the government has effectively changed its mind on what was announced in the budget.

In fact, we are left with very little from the mini budget regarding tax cuts.

 

What was announced originally

You can see the full announcements in our blog on the subject, but in short initially we had:

  • Corporation tax rises were being scrapped (up to -6% tax cut for companies)
  • Health and Social Care Levy was being scrapped (-1.25% tax cut for many)
  • Dividend tax cut (-1.25% tax cut)
  • Basic rate of income tax going down to 19% (-1% tax cut)
  • IR35 reforms being reversed (Relevant to limited company contractors)
  • … and initially 5% tax cut for those earning over £150,000 a year (quickly reversed)

 

What we now have

  • Corporation tax rises were being scrapped (up to -6% tax cut for companies)
  • Health and Social Care Levy was being scrapped (-1.25% tax cut for many)
  • Dividend tax cut (-1.25% tax cut)
  • Basic rate of income tax going down to 19% (-1% tax cut)
  • IR35 reforms being reversed (Relevant to limited company contractors)
  • … and initially 5% tax cut for those earning over £150,000 a year (quickly reversed)

 

There’s still more to come!

We still have a ‘medium term fiscal plan’ being given on 31st October….. so watch this space for more news. In his speech, Chancellor Jeremy Hunt stated there will be further difficult decisions on tax and spending to come.

As a reminder there are some other tweaks and reversals to non-tax issues, but we’ve not covered those here.

 

I’m still confused about what’s happening

You are not alone! Ask your accountant about how recent changes might affect you and your business. If you don’t have an accountant, or not 100% happy with your current accountant, we’d love a chat about how we can help.