The Mini-Budget took place on Friday the 23rd of September 2022, with the new Chancellor Kwasi Kwarteng claiming that these were the biggest tax cuts in a generation.
Here we take a look at what you need to know as an umbrella company contractor:
National Insurance
For umbrella contractors, the rise in National Insurance earlier this year came as a double blow due to the way an umbrella company works.
This is because there’s not only the employees NI rise to take into consideration, but also the increased costs that will come from their umbrella company’s overheads (due to the company paying out more for inflated Employer NIC).
From the 6th of April 2022, NICs rose by 1.25% in order to not only help the NHS to recover from the pandemic, but to fund the UK’s health and social care too.
This increase was then going to be separately deducted as part of the Health and Social Care Levy from April 2023, however, the new Chancellor has decided to reverse this temporary increase with rates going back down from the 6th of November 2022.
Income Tax
In the 2022 Spring Statement, the announcement of a 1% reduction in income tax was met with some disappointment due to it not coming into effect until 2024.
However, the plan to cut income tax from 20% to 19% has now been accelerated to come into effect in April 2023.