One of the Mini-budget reversals was the basic rate of income tax – it was previously announced that it would drop from 20% to 19%, however, it will now remain at 20% until economic conditions allow it to drop.
There are changes to the additional rate of income tax (45%) with the threshold set to reduce from £150,000 to £125,140 from April 2023.
Personal tax allowance (£12,570) and the higher rate threshold (£50,271) have been frozen until 2028.
Benefits will increase in line with inflation – this includes the state pension. The standard minimum income guarantee in pension credit will also rise in line with inflation from April next year.
This will result in around 19 million families seeing their benefit payments increase from April 2023.
National Living Wage / National Minimum Wage
Both the National Living Wage and National Minimum Wage will be increased from the 1st of April 2023.
Here are the rates for each category:
- Apprenticeships – £5.28 an hour
- 16-17-year-olds – £5.28 an hour
- 18-20-years-olds – £7.49 an hour
- 21-22-year-olds – £10.18 an hour
- 23-year-olds and over – £10.42 an hour
Fuel / Vehicles
The price of fuel is set to rise with a 23% hike in fuel duty from March 2023, which adds another 12p per litre tax on petrol and diesel.
Those with electric cars, vans and motorcycles will also need to be aware that from April 2025 they will have to pay Vehicle Excise Duty – this is so that all road users are paying a fair tax contribution.
From the 1st of January 2023, the Energy Profits Levy on oil and gas companies will increase from 25% to 35% until 2028.
The Energy Price Guarantee (EPG) will be upheld throughout winter, which will limit typical energy bills to £2,500 per year, however, from April 2023 this figure will rise to £3,000.
Although not directly affected, umbrella company contractors might be interested to learn that despite the government previously announcing that IR35 rules would be simplified, it has been confirmed that this is no longer the case.
With the legislation becoming more complicated and confusing over the years for all those involved, this has been met with great disappointment from limited companies and contractors.
We hope you found this page helpful. Our team of experts are available to answer any questions you may have, so drop us a line on 01206 591 000 or email Jaime at email@example.com.