From income tax cuts and national insurance contributions to bankers’ bonuses, the mini budget announced by the Chancellor, Kwasi Kwarteng, certainly had some points of interest for business owners and their employees.
Combine that with changes announced this week, we look at what the package of measures announced on the 23rd mean for employers.
Basic Rate of Income Tax
A year earlier than planned, the basic rate of income tax will be cut by 1p in the pound from next April taking it down to 19%. The first cut to the basic rate in 15 years.
The Government has announced that the 1.25% National Insurance Contributions (NICs) increase will be reversed from 6 November 2022.
This change to National Insurance contributions applies to:
- Class 1 (paid by employees)
- Class 4 (paid by self-employed)
- secondary Class 1, 1A and 1B (paid by employers)
From 6 November 2022 the main and additional rates of Class 1 employee NICs will be reduced by 1.25 percentage points to 12% and 2%. Class 1 employer NICs will also be reduced by 1.25 percentage points to 13.8%.
IR35 Reforms to be simplified
The new Chancellor also confirmed that the proposed changes to off-payroll working rules will be repealed from 6th April next year.
The off-payroll workers rule, which placed the onus for calculating tax on employers rather than contractors, will be scrapped leaving the responsibility to the contractors for assessing their own tax obligations.
Read our latest article “IR35 reforms and what this means for you” for more information…
Support for the over-50s returning to work
One final significant point to come from the mini budget was the introduction of additional support for those claiming Universal Credit over the age of 50. The purpose is to help them return to the workplace and follows the recent news of older workers returning to the labour market during the cost-of-living crisis.
If you would like further information on the HR policies and procedures you can implement to support your staff, get in touch with hr inspire – Hertfordshire’s leading HR consultancy that can bring your business the benefits, protection and experience of an entire HR department.