In the Autumn Statement 2022, Chancellor Jeremy Hunt announced some reversals to the mini budget that took place in September. He also announced several measures to attempt to stabilise the fragile economy. Here we look at some of these key points and how they might affect limited companies and sole traders.
Rise in Corporation Tax
Whilst this decision was briefly reversed in the autumn mini budget, the Chancellor confirmed in the 2022 Autumn Statement that the original Corporation Tax rate will increase from 19% to 25% in April 2023 for those businesses who have a taxable profit above £250,000.
For those companies who earn profits below £50,000, the tax rate remains at 19%.
Businesses that earn between £50,000 and £250,000 in profit will pay tax at the main rate reduced by a marginal relief to allow for a gradual increase in the tax rate. =
VAT threshold maintained
The Autumn Statement 2022 saw the VAT threshold remain at £85,000 until 31st March 2026.
This means that potentially more businesses will discover that they need to register for VAT, resulting in more income for HMRC.
As businesses reach the threshold, they will need to register for VAT, charge customers for VAT and submit VAT returns.
Change to Income Tax
The 2022 Autumn Statement announced that the threshold for the 45% tax rate for those earning over £150,000 would be lowered to £125,140 from April 2023.
All other Income Tax thresholds will be maintained at their current rates until April 2028.
Changes to National Living Wage and National Minimum Wage
For those people over 23 years of age, the National Living Wage rate will increase from £9.50 to £10.42 per hour from April 2023.
Additionally, the Autumn 2022 Statement announced that the National Minimum Wage rate will see increases for people aged between 16 and 22.
Whilst this news is welcome for those people struggling on the lowest pay during the current cost of living crisis, it will mean businesses already feeling the squeeze from rising costs, supply chain issues and falling profits, will have to also deal with higher wage costs.
National insurance rates
National Insurance Contribution (NIC) thresholds and NIC Class 1 rates will be frozen until 2028.
Class 2 and 3 NIC rates for the self-employed will be raised to £3.45 and £17.45 per week respectively from April 2023.
Business rates package
During the Autumn 2022 Statement, the Chancellor introduced a £13.6bn package to provide relief for business rates starting in April 2023.
Support will increase for 230,000 businesses in the retail, leisure and hospitality sectors, plus there will be caps on those businesses losing rural rate and small business relief.
Keep up to date with the latest tax changes
Most measures introduced in the Autumn Statement 2022 are set to begin in 2023, so you have some time to plan ahead and factor in any changes that affect your business. Office Assistants are here to ensure that your bookkeeping is up to date and compatible with recent announcements concerning tax and VAT.
To discuss any concerns or if you have any questions, please get in touch.
