Mini-Budget 2022

(3 minutes to read)

On Friday 23rd September 2022, Chancellor Kwasi Kwarteng announced the details of the Mini-budget, stating what he claims to be the biggest tax cuts in a generation.

Here’s what you need to know as a limited company contractor:

National Insurance

It was announced earlier this year that NICs would be increasing as a ‘Health and Social Care Levy’ in order to help the NHS recover from the strain of the pandemic.

From the 6th of April 2022, an extra 1.25% was added to National Insurance – these changes were always meant to be temporary, lasting for one year until April 2023.

However, the Chancellor has decided to reverse this short-term rise starting from the 6th of November 2022, with the Health and Social Care Levy being scrapped entirely, despite talks about introducing it as a method of paying for the NHS.

Income Tax

Previously, the government announced that there would be a cut in income tax; reducing it by 1%, from 20% to 19%.

At the time, we were told that this wouldn’t come into effect until 2024, however, this has now been accelerated to come into effect in April 2023.

In a move to ‘incentivise enterprise and hard work and simplify the tax system’, the government has also made the decision to abolish the 45% higher rate of income tax with a single higher rate of 40% set to be introduced from April next year.

Corporation Tax

Earlier this year, the rate of corporation tax was set to rise from 19% to 25% in 2023 in order for the UK’s businesses to help toward the economic recovery.

However, in another turnaround, this has now been scrapped with the rate remaining at 19% for the majority of firms.

Dividends

Dividend tax rates increased on the 6th of April 2022, but they are now dropping back down from April 2023 to:

  • Basic rate – 7.5% (was 8.75%)
  • Higher rate – 33.75% (was 32.5%)

The additional rate will be abolished.

Energy

In addition to the Energy Price Guarantee for households, the Energy Bill Relief Scheme will be very much welcomed by UK businesses.

Designed to cut energy prices for non-domestic energy customers, the scheme will apply to fixed contracts agreed on or after 1st April 2022 in addition to deemed, variable and flexible tariffs and contracts.

It will apply to energy usage from the 1st of October 2022 to the 31st of March 2023 and businesses won’t need to register for the scheme, as it’ll be automatically applied to bills.

IR35

News that will be very much welcomed by the self-employed and business owners, is that IR35 rules are to be simplified.

The legislation has seen many changes over the years and it seemed to be that each change made it that bit more complicated and confusing for all those involved.

The most recent reform (in 2021) meant that it became the responsibility of the client to decide a worker’s status, which put more pressure on businesses and resulted in many choosing a blanket approach.

However, from the 6th of April 2023, workers will once again be responsible for determining their own employment status and will therefore pay the correct amount of tax and NICs.

Commenting on the IR35 changes, Zeeshan Anwar, Head of Compliance at Dolan Accountancy, said, “It’s a pleasant surprise that the new Government has moved so swiftly in repealing the off-payroll reforms, and undoubtedly this will make the whole contractor industry very happy.

“The reforms made contracting complex and burdensome, and going back to the old rules should bring some simplicity back to the sector. The industry has time, until April 2023, to ensure compliance with the IR35 rules and I’m hoping that end clients, recruitment businesses, and indeed the public sector rethink their positions regarding limited company contracting and not be so detrimentally cautious like before.”

We hope you found this page helpful. If you’d like to sign up or need any further information, please call one of our friendly experts on 01442 795 100 or email sophie.lewis@dolanaccountancy.com.

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Why Dolan Accountancy?

Dolan Accountancy was set up by Simon J Dolan, the man behind the well-known brand SJD Accountancy. With over 25 years experience in the contracting marketing, Dolan Accountancy has the heritage, reputation and credibility you can trust. Working closely with our sister company, Contractor Umbrella, it means we can offer one low cost, fixed fee package at £105 + VAT per month. This gives you the flexibility of using both our Limited Company Accountancy Services and our award winning Umbrella Service, for one inclusive cost. We don’t believe in tiered packages or hidden extra fees, instead we aim to give you everything you need, including:

  • Free Company Formation – This is where it all begins. Once you have decided on an available name, we will form your company free of charge (if using our accountancy services) and it will be ready for you to use in as little as three hours.
  • Free use of Contractor Umbrella – With changes in Public Sector IR35 Legislation we understand that sometimes you are required to contract via an umbrella company. We will keep your limited company ticking over, while you work margin free via our sister company, Contractor Umbrella.
  • A Dedicated Accountant – Your accountant will be there for any company or personal tax advice that you require. We will never outsource work, even to internal teams.
  • Free Access to FreeAgent – The founder behind the multi award winning FreeAgent platform was one of Simon’s first clients, therefore it only seems fitting that we offer all of our clients access to FreeAgent, free of charge.
  • Free Business Banking – We have decided to waive our commission so our clients can use Tide free of charge for the first year.
  • Unlimited IR35 Status Reviews – We will review all of your contracts for IR35 purposes and provide you with our professional opinion as to its status.
  • Free Registered and Director’s Service Office Address – Sometimes you just don’t want your home address on display at Companies House. When you sign up to our accountancy services, we will offer the use of our address as an alternative.
  • Your Business and Personal Taxation Needs – This includes Company Accounts, Director’s Personal Tax Return, VAT Returns, Payroll, Corporation Tax and Dividend advice, to name just a few.
  • Same day payments- We offer same day payments as standard providing funds are received into our account by 9am, for no additional fee.

If you’d like to find out more about how Dolan Accountancy can help you and your business, please give us a call on 01442 795100 or email sophie.lewis@dolanaccountancy.com or jaime.thorpe@dolanaccountancy.com.

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