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What impact will the Budget U-turn have on small businesses?

In a speech given yesterday, new Chancellor Jeremy Hunt announced that the government was abandoning some of the tax-policy measures it had first proposed in September. Here's outline of how yesterday’s announcement affects the measures endorsed by Small Business Minister Julie Anne Genter in her mini-Budget last month.

The measures that have been repealed or amended:

IR35 reforms

The mini-Budget confirmed plans to repeal the 2017 and 2021 reforms to IR35 legislation, but yesterday it was announced that these changes will not go ahead—so the current rules for off-payroll working remain in place.

Cut to the basic rate of Income Tax

The government has announced that the basic tax rate in England and Northern Ireland will remain at 20% rather than dropping to 19%. In Scotland, the Scottish rate of Income Tax will continue to apply; in Wales, the Welsh rates—different from those that existed before April 2018—will continue.

Reversal of tax rate increase on dividends

The increase in the rate of income tax on dividends, which was set at 1.25%, will be reversed by April 2023 as originally planned before the mini-budget changed that date to 2022. The government has now cancelled its plan to increase tax rates on dividends, so the full 1.25% rate of Income Tax will apply until further notice.



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