Mini Budget for Contractors: UPDATED

The new Chancellor, Jeremy Hunt, has announced the government is scrapping almost all of the tax measures set out in its mini-budget three weeks ago to “provide confidence and stability”, including repealing IR35 reforms.

On 23rd September, the ex-Chancellor, Kwasi Kwarteng, announced that the most recent changes to IR35 reforms would be repealed and that from April 2023, contractors and consultants would once again be responsible for determining their employment status.

We, along with the contracting community, celebrated this news at the time. Today’s announcement, though very disappointing for contractors, was unsurprising considering the market turbulence of the past couple of weeks.

Mini Budget 2022: UPDATE

What’s staying?

  • Cuts to National Insurance and cuts to Stamp Duty will remain

What’s going?

  • Plans to repeal reforms to off-payroll working (IR35) have been scrapped
  • The planned 1p cut in the basic rate of income tax has now been reversed and will “remain at 20% indefinitely”
  • Cuts to dividend rates have been scrapped

The cap on energy bills is now guaranteed until next April but further support will be reviewed by the Treasury

What else was originally in the Mini Budget?

The ex-Chancellor had also announced plans to scrap the 45p additional rate of tax in the Mini Budget. The government did a u-turn on these plans on 3 October.

  • National Insurance rise scrapped: From 6th November the government is cutting National Insurance by 1.25 percentage points and cancelling the Health & Social Care Levy. 
    • If you pay yourself a salary, you’ll save on both personal and business NI contributions. 
  • Stamp Duty Land Tax cut: For contractors planning a home move in the future, changes to the stamp duty thresholds will be welcome news.   
    • From today (23 September 2022), the SDLT threshold for residential property doubles from £125,000 to £250,000.
    • First-time buyers will now pay SDLT from £425,000
    • First-time buyers’ relief can be claimed £625,000