Following pressure from members of his own party, the Chancellor has made a dramatic U-turn on the abolition of the additional rate band for income tax purposes, which he had previously announced a week ago.
The additional rate of income tax, being 45% for savings or non-savings income and 38.1% for dividend income, will remain in place from 6 April 2023.
We still expect that the 1% decrease in basic rate income tax will come into effect on 6 April 2023; in addition, the reduction of 1.25% on the rates of dividend income will also still come into effect on 6 April 2023.
The National Insurance increase of 1.25% which was brought in by Rishi Sunak on 6 April 2022, will be reversed effective from 6 November 2022.
With all this uncertainty around the economy and tax rates, it is more important than ever for owner-managed business owners to review their strategy for drawing income from their business to ensure that they are in the best possible position.
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For further guidance on any of the tax measures discussed in this article, please contact your usual MHA advisor or Contact Us.
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