The new Chancellor of the exchequer, Jeremy Hunt, has today ripped up the previous announcements made by his predecessor Kwasi Kwarteng in another dramatic U-turn for the new Government.
The 1% reduction in income tax, which was due to come in from 6 April 2023, 12 months earlier than Rishi Sunak had originally planned, is now being delayed indefinitely. The new Chancellor stated that he will only bring this in when the economic conditions allow. This cut in income tax was due to cost over £6bn per year.
National Insurance will still be cut from 6 November 2022 as previously announced, although somewhat surprisingly, the reduction of the rate of income tax on dividends from 6 April 2023 will not occur.
Income tax rates on dividend income will remain at their current rate, being 8.75% for basic rate, 33.75% for higher rate and 39.35% for additional rate.
The increase of 1.25%, which was effective from 6 April 2022, was to repliciate the increase in National Insurance; so one increase is staying and one is going.
With the ever-changing rates, it is more important than ever for owner-managed businesses to review the way they draw income from the business.
Read the latest Emergency Tax Statement commentary
Visit our dedicated hub where we will be providing resources, advice and practical guidance on what these emergency tax measures mean for you and your business, to help you prepare and manage their impact.
