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Mini-budget - 23 September 2022

  • United Kingdom
  • Tax planning and consultancy - Budget

23-09-2022

Our UK tax team responded to the government’s announcements in the mini-budget on 23 September 2022. Their comments are set out below.

David Jervis, Partner: “Although the repeal of IR35 is welcome and will improve the competitiveness of the UK tax system, many employers concerned about reputational risk will continue to be concerned about contractor arrangements. The agency rules are also potentially of wide application, and HMRC has been prepared to apply these rules to certain outsourcing arrangements, so careful consideration of the tax treatment of contractors is likely to remain a feature of the UK tax system for large employers.”

Charlotte Stodell, Principal Associate:The changes to SDLT, taking effect from today, are good news for first-time buyers and those buying at the lower-end price range of the property market.  The 2% rate on residential purchases has been scrapped increasing the nil rate band from £125k to £250k (effectively a maximum £2,500 saving for any non-first-time buyer). For first-time home buyers, the limit for the SDLT exemption has been increased from £300k to £425k, and the maximum property value to which the first-time buyer rules apply has increased from £500k to £625k. However, notwithstanding surging inflation, any hope for an index-linking for the entirety of the residential rate bands has been dashed. However, a permanent change to the SDLT rules is a sensible approach, providing longer term incentivisation of house buying in a period of rising interest rates to hopefully avoid a temporary rush on house purchases such as that seen with the pandemic SDLT holiday measure.”

Danny Blum, Head of Incentives Team:The proposed increase in the individual limit on the value of shares which are subject to tax advantaged Company Share Option Plan awards from £30,000 to £60,000 is very welcome and is something which we have been requesting from HMRC for many years.  CSOP options are a very valuable benefit and the increase means that they become even more valuable to the larger companies in the UK which are unable to offer other meaningful tax advantaged incentive arrangements.  Given fears of a recession, energy costs and companies needing to conserve cash, share options are an easy, risk free way to reward and incentivise employees and conserve cash. The intended relaxation on some of the more restrictive terms of CSOP options will also make the arrangement available to more privately owned companies, an increasingly important sector of the economy which until now has been limited by unnecessary complication in the applicable rules.  These changes, together with the other reductions across employment taxes, will enable UK businesses to offer genuine incentive arrangements to their employees which should increase productivity and boost the economy generally.”

Giles Salmond, Partner: “The mini-budget included the introduction of VAT-free shopping for overseas visitors. This will be a welcome development for British retailers, which will boost their competitiveness in attracting international custom. The Chancellor’s promise to replace the old paper-based system with a modern, digital one, is unsurprising in the context of HMRC’s current Making Tax Digital programme.”

Ben Jones, Co-Head of Global Tax: “The abolition of the 45% additional income tax rate was one of the more surprising announcements in the mini-budget. This significant change, which forms part of the government’s overall tax-cutting agenda, will make the UK more attractive to highly skilled workers. Another striking development was the impressive breadth of the new Investment Zones tax incentives, which may prove effective in bolstering investment across the country.”

See the post on LinkedIn here.

For more information on the mini-budget and how this may impact on your business, please get in touch with your usual Eversheds Sutherland contact or contact the below: