On Friday 23 September 2022, the Chancellor announced his highly anticipated mini budget. Some updates were made in advance, however it still detailed a number of important changes. There were several announcements affecting tax and National Insurance Contributions that UK employers should be aware of.

Tax – what is changing as a result of the mini budget?

  • The planned Corporation Tax increase from 19% to 24% has been cancelled. Corporation Tax will remain at 19% instead.
  • From 6 April 2023, the basic rate of Income Tax will fall from 20% to 19%.
  • From 6 April 2023 the top rate of Income Tax, 45%, will be abolished. The 40% rate will stay the same, becoming the new top rate of Income Tax.
  • For employees gift aiding charitable donations, there is a transitional period whereby the gift aid relief will remain at 20% for 4 years.

National Insurance Contributions rates cut

  • National Insurance Contribution rates will be cut by 1.25% for employees and employers from 6 November 2022 returning the employee standard rate to 12% and upper rate to 2%, and the employers standard rate to 13.8% (this includes Class 1A and Class 1B NIC rates).
  • The Health and Social Care Levy due to be introduced on 6 April 2023 adding 1.25% to employee and employers National Insurance Contributions has been cancelled.

IR35 Off Payroll Intermediaries Legislation update

A full circle change of IR35 legislation, otherwise known as off payroll working, has been announced. Since 6 April 2017 (for the public sector) and 6 April 2021 (for the private sector), it has been the engagers responsibility for assessing whether a worker is caught by IR35. This has caused much friction between engager and worker.

From 6 April 2023, it will be the workers responsibility for assessing whether they are caught by IR35. Until April, we must continue with the current regime where it is the engager’s responsibility to assess IR35.

What Dataplan are doing to help our clients

Needless to say, here at Dataplan, we will incorporate the revised amendments to the various rates at the appropriate times for our clients. Our experts are informed of the upcoming changes and how they will impact payroll processing.

Do you need help to navigate the impact these changes will have on your payroll? Contact us to find out how our experts can help.