Review of September 2022 Mini Budget
Following on from yesterday’s news that the 1.25% (Employer and Employee) NIC rate raise will be scrapped from 6 November 2022, there were more encouraging tax cuts announced today. Kwasi Kwarteng revealed that personal tax rates will be cut and the planned increase to the rate of corporation tax will be scrapped.
The key headline which Fund managers will be pleased to hear is that the 45% additional rate of tax will be abolished from April 2023. The basic rate of tax will also be dropped from 20% to 19%. The dividend additional rate will also be removed to align with the dividend upper rate, which is being reduced to 32.5% from 6 April 2023.
Whilst this may direct start up Fund Managers to go down the LLP route as opposed to a LTD, we should highlight that a LTD should not be ruled out due to its ability to tax efficiently retain earnings which qualify – once audited- as regulatory capital resources, and the flexibility that LTDs offer (e.g. tax deferral). Careful modelling should still therefore be carried out when deciding on the most appropriate structure. We wrote an article on LLP v LTD in August 2021 and will update and repost it for the new rates in due course.
Alongside the corporation tax rate remaining at 19% the annual investment allowance will also remain at £1 million. This will be helpful for Fund Managers who are planning substantial office refurbishments now that employees are returning to the office.
Today’s news will continue to make the UK an attractive place of business for asset managers and we expect to see more inbounds into the UK. The UK continues to deliver as an attractive destination for asset management | Wheelhouse Advisors (wheelhouse-advisors.com)
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