This time last week the new Chancellor - Kwasi Kwarteng - announced a number of significant tax changes in his 'Mini-Budget' to Parliament.
Although designed to stimulate the UK economy and 'get things moving', financial markets didn't take too well to Mr Kwarteng's plan with the value of GBP taking a nosedive and Government borrowing costs rising sharply.
Nevertheless, there were several key changes to fiscal policy that will impact businesses and business owners across the UK.
As such, we've put together a useful breakdown of the key takeaways from Friday's announcement:
Dividend Tax
In April 2022, the rate of income tax applied to dividend income rose by 1.25% to 8.75%.
From April 2023, the Chancellor will reverse this rise so that dividends will once again be taxed at 7.5% and 32.5%, for basic-rate and higher-rate taxpayers, respectively.
Corporation Tax
The rate of corporation tax had been set to increase to 25% from April 2023. However, the planned hike has now been cancelled.
As a result, limited companies will continue to pay corporation tax at the current level of 19%, for the foreseeable future.
Further, this will also bring calculation changes for the 'Super-deduction' capital allowance, due to be announced at a later date.
Income Tax
The current top rate of income tax (being 45% levied on income of £150,000 or more) will be abolished from April 2023 in England, Wales and Northern Ireland.
This means that from April 2023, the top rate of income tax for these countries will be 40%.
In addition, the basic rate of income tax for England and Northern Ireland will reduce from 20% to 19%.
This reduction will apply from April 2023 onwards although there are no confirmed changes for Scotland or Wales.
Annual Investment Allowance
From April 2023, the 'AIA' limit had been set to reduce back down to £250,000 per year.
However, the limit will now remain at £1,000,000 per year, for the foreseeable future.
National Insurance
In April 2022, National Insurance rates were increased by 1.25% until April 2023.
From April 2023, this increase would then continue at the same level under a new Health & Social Care Levy.
However, not only did Mr Kwarteng confirm cancellation of the new levy, he also announced the 1.25% rate increase would be reversed from November 2022.
This means that from November 2022 onwards, the NI rates will be:
Class 1 Employee's NI - 12%
Class 1 Employer's NI - 13.8%
Class 4 NI (Self-Employed) - 9%
The Class 2 NI (Self-Employed) rate was unaffected by the previous increase and therefore is not subject to change in this announcement.
Where NI is calculated monthly, employees will see these changes take effect in their first payroll after 6th November 2022.
Where NI is calculated annually, such as for company directors and the self-employed, revised annualised rates will be applied. These rates will be announced at a later date.
Energy Bills
Prior to the Chancellor's Mini-Budget, Business Secretary - Jacob Rees-Mogg - announced the government's Energy Bill Relief Scheme, which gave more detail around plans to support businesses with rising wholesale energy prices.
Under this scheme, the government will provide a discount on wholesale gas and electricity prices for all UK businesses through a 6 month period from 1st October 2022 to 31st March 2022.
As such, during this period, businesses in Great Britain (not Northern Ireland) will receive government discounted pricing as follows:
£211 per megawatt hour (MWh) for electricity
£75 per MWh for gas
For context, wholesale costs in England, Scotland and Wales for this winter are currently expected to be around £600 per MWh for electricity and £180 per MWh for gas.
For clarity, businesses do not need to contact their energy supplier as the discount will be applied automatically to bills.
So, plenty to take in! Importantly, if you have any questions or queries around the announced tax changes, we would recommend speaking with your company accountant or a qualified tax professional.
Equally, some of these changes may lead businesses to recalibrate investment plans and review business finance requirements.
If this applies to your company, please don't hesitate to get in touch - From asset finance to invoice finance, business loans to commercial mortgages, we're experts in all things business funding!
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