As previously indicated, the proposed increase in the rate of corporation tax to 25% from April 2023, will no longer go ahead. Companies will, therefore, continue to pay 19% on their taxable profits.
As a result of cancelling the corporation tax rate increase, there will be implications for the Capital Allowances Super Deduction, which was introduced a few years ago anticipating the higher rate of corporation tax. As such, amendments will be required to the rate of relief to ensure the measure continues to operate as intended.
The Annual Investment Allowance offering 100% tax relief for qualifying investments in plant and machinery, currently set at £1m, was due to fall to £200,000 from April 2023. However, it is now proposed that the allowance will remain at £1m and will become a permanent relief at that level.
Stamp Duty Land Tax
The starting point at which Stamp Duty Land Tax (SDLT) is payable on purchases of residential properties in England and Northern Ireland will double to £250,000 from 23 September 2022. The threshold for paying residential SDLT will also be increased for first-time buyers from £300,000 to £425,000 and the maximum value of a property on which first-time buyers’ relief can be claimed will also increase from £500,000 to £625,000, again from 23 September 2022. The team at Mercer & Hole do not advise on SDLT; we reference the above as part of our Mini-budget 2022 review.
A new VAT-free shopping scheme for non-UK visitors
Despite speculation about a change to the VAT rate, the only mention of VAT in today’s announcement was the reintroduction of a modernised Retail Export Scheme. A digital system is to be developed and the government’s projections do not anticipate this being operational before 2024.