On Friday the government announced their new 'Growth Plan' (I'd love to know why haven't said budget like they normally do, some sort of marketing angle?) & it has brought many changes for accountants and software providers alike with all the tax changes. But what does it mean for you and your business? Well self-employed or limited company - there are changes to make note of.
Corporation tax rise (due April 2023) CANCELLED, keeping it at 19% - Hurray! Less tax for limited companies
Health & Social Care Levy (due April 2023) CANCELLED & the 1.25% NI Increase CANCELLED from Nov 2022 Hurray! A win for the self-employed, limited companies & employers alike! Not only will you pay less NI on your own earnings, but employers NI will be reduced
1.25% Dividend tax rate increase (due April 2023) CANCELLED - Hurray! All basic rate dividend income will remain at 7.5% from April 2023
Basic rate of income tax cut to 19% in April 2023 - Less tax if you are earning over £12,570 per year (But on average worth £170 per year so not a big win)
'The Growth Plan' - The Big Winners
By far the biggest winners of the new growth plan are the higher earners.
From April 2023:
Additional Rate of Dividends - ABOLISHED
Higher rate of income tax - REDUCED to 40%
In real terms this is what it means for you please see below chart, from £2,000 of dividends with no change, to £50,000 of dividends will be a tax saving of £3,288.
