Budget News

The mini-Budget – all change, again!

October 28, 2022

As the government U-turns on most of its tax cuts and energy bill support, find out how the new mini-budget affects you and your finances.

More Uncertainties for Business Owners

It has been an astonishing few weeks in Westminster all of which has succeeded in creating yet more areas of uncertainty for those of us trying to run a business.

Following on from last month’s TAG Accountants newsletter, following the new Chancellor’s latest announcements (Mr. Hunt for those who cannot keep up), we set out below those areas that have survived and those that have not. It is worth noting that there will now be a full Autumn Budget statement that will no doubt include further tax increases on 17th November.

In addition, we have also included a warning regarding self-assessment scams and provided some further detail on the Energy Bill Relief Scheme for businesses.

The Mini-Budget U-turn summarised

The Statement from the new Chancellor announced that “almost all” tax measures proposed in Kwasi Kwarteng’s Mini-Budget would be reversed other than those for which legislation had already been introduced.

The following mini-Budget measures will now not be going ahead:

  • Scrapping of the 45% additional rate of income tax
  • Reduction in the basic rate of income tax. The basic rate is now 20% ‘indefinitely’ until economic circumstances allow for a reduction
  • Cuts to dividend tax rates. That said, the 1.25% increase effective from April 2022 will remain.
  • Removal of the 2017 and 2021 off-payroll working rules. The reforms will remain in place
  • A new VAT retail scheme for overseas visitors
  • A freeze on alcohol duty rates. The alcohol duty review will continue as planned

The following changes are going ahead:

  • Scrapping of the health and social care levy (and associated NICs increases)
  • Changes to stamp duty land tax rates and bands
  • A permanent £1m annual investment allowance
  • Seed enterprise investment scheme and company share option schemes rule changes

Regarding the introduction of investment zones, the Chancellor said that the policy will be implemented in a way that learns the lessons from other similar models that have been tried in the past.

Furthermore, life for businesses and individuals is not expected to get any easier, notwithstanding the chance we could also end up with a General Election soon. In that event, there are rumours that the next likely government may implement a lot of the recommendations that the office for tax simplification suggested in a review a few years ago which included aligning capital gains tax rates with income tax and cutting the Nil Rate Band for trust transfers to £30k per individual.

So, what is the key message to take away from all of this?

Without a doubt, we are in a period of great uncertainty and really the only thing we can be certain of is what the existing tax laws allow taxpayers to do.

Therefore, if you are considering any of the following in the short to medium term, it is worthwhile booking a consultation with us to discuss your options and tax position as it currently stands:

  • Exiting/Selling/Retiring from your business, including possible MBOs and/or Employee Ownership Trusts (EOTs)
  • If you are looking to protect assets from Inheritance tax

Energy Bill Relief Scheme for non-domestic customers

The Energy Bill Relief Scheme (EBRS) provides energy bill relief for non-domestic customers in Great Britain (Scotland, England, and Wales) with discounts being initially applied to energy used in the period between 1 October 2022 and 31 March 2023. This support will be applied automatically to all eligible bills by suppliers meaning you do not need to take any action or apply for the scheme.

The level of support for each organisation varies depending on the type and date of the contract with further details available in the UK Government Energy Bill Relief Scheme guidance.

The scheme is available to those on a non-domestic contract, which includes:

  • Businesses
  • Voluntary sector organisations, such as charities.
  • Public sector organisations including schools, hospitals, and care homes.

which are:

  • On fixed price contracts agreed on or after 1 April 2022.
  • Signing new fixed-price contracts.
  • On deemed / out of contract or variable tariffs.
  • On flexible purchase or similar contracts.

The scheme is intended to be for a wide range of businesses and other non-domestic customers with some limited exclusions so many businesses should benefit.

Self-assessment Scams

HMRC has stated that it wants self-assessment customers to remain vigilant of fraudsters and scams that ask for personal information and/or bank details.

Fraudsters target customers when they know they are more likely to be in contact with HMRC, which is why individuals and businesses should be extra vigilant about this activity. There is a risk they could be taken in by scam texts, e-mails, or calls either offering a refund or demanding unpaid tax, thinking that they are genuine HMRC communications.

Those who have not yet completed a self-assessment return previously might be tricked into clicking on links in these emails or texts and thus give away personal or financial information to scammers and criminals.

Anyone contacted by someone claiming to be from HMRC that in any way arouses suspicion is advised to first take their time to review that information and then also check the HMRC’s own scams advice pages.

Customers can then report any suspicious activity to HMRC. Please forward suspicious texts claiming to be from HMRC to 60599 and forward or copy any emails to phishing@hmrc.gov.uk. Additionally, any tax scam phone calls that are received can also be reported to HMRC using this online form.

The best advice is to stay vigilant and sceptical. You can always contact the TAG team if in any doubt about messages/calls that are supposedly received from HMRC.

Let us know if you need any help with any of this

As always, we are here to help, so if you need assistance with any of the issues raised above, please book an appointment to discuss it with us in complete confidence by calling our friendly tax experts here at TAG Accountants Group, Wolverhampton on 01902 783172 or alternatively, just click HERE to contact us via our website.

We very much look forward to helping you.