Further to the announcement of the changes to National Insurance and the HSC levy, the chancellor Kwasi Kwarteng made further announcements in his “mini-budget” concerning taxation. These were certainly not expected, and in the case of base rate taxation brought the March announcements forward by a year. The key statements were made for changes from April 2023:
- The removal of the additional rate of tax of 45% - removing the additional rate for income over £150,000
- The previously announced reduction of the basic rate of income tax from 20% to 19% which was due from April 2023, updating on the promises made by the previous chancellor of the Exchequer, Rishi Sunak, in his spring statement, in which he pledged to do this by April 2024.
- There will however be a four-year transition period for Gift Aid relief, to maintain the income tax basic rate relief at 20%, until April 2027.
- There will be a one-year transitional period for relief at source pension schemes to allow them to continue to claim tax relief at 20%.
This is a major change to current legislation for 2023/24 reducing the tax burden on every taxpaying individual. It’s important to remember however that there will need to be a further review in Scotland and Wales due to their devolved tax regimes through SIT and WRIT, so we await further announcements.
