Mini-Budget 2022: What Does It Mean For Recruitment?
On Friday 23rd September 2022, Chancellor Kwasi Kwarteng delivered a mini-budget in the House of Commons, to tackle the rising cost of living and hopefully tame inflation.
TBOS shares our feedback on the Mini-Budget 2022…
- The 1.25% hike in National Insurance Contributions that was introduced in April 2022 has been reversed from 6th November 2022.
This reverse on the increase in National Insurance Contributions will save nearly 28 million people an average of £330 per annum as well as save over 920,000 firms nearly £10,000. This will be welcome news to recruitment agencies whose main cost is staff which also includes the National Insurance contributions. This will also reduce the cost of PAYE contractors for Temporary Staffing agencies and their end clients.
- The 1.25% hike in Dividend Tax Rates that were introduced in April 2022 will be reversed in April 2023.
This change back to the previous Dividend Tax Rates will be welcomed by Recruitment Agency Owners who are often paid via dividends. This could encourage recruitment entrepreneurs to decide to start their own agencies as well as stimulate growth in existing agencies.
- Income Tax reducing from 20% to 19% in 2023 (One year earlier than expected).
- Scrapping of the 45% additional income tax band (The 40% higher rate will remain).
This reduction in the income tax rates will be welcome news for all employees including higher rate earners as 31 million people will be better off by an average of £170 per year.
- Planned increase in Corporation Tax from 19% to 25% has been cancelled.
The reverse of this tax rise could put £19bn a year back into the economy and mean that the UK will have the lowest rate of Corporation Tax in the G20 economy. This allows businesses to pay less tax on their company profits and take more dividends from their own businesses.
- Reform of IR35 to simplify the rules to remove “unnecessary complexity and cost” for businesses from April 2023.
By scrapping the reforms from 2017 and 2021, this will allow contractors to once again be paid via limited companies instead of via PAYE/umbrella company methods. Contractors will once again will decide if their working relationship resembles self-employed or employed engagement instead of the end client or the recruitment agency.
- Planned increases in duty rates for beer, wine and cider will be cancelled.
No increase to the alcohol duty will be music to a recruiter’s ears (especially on those Thursday nights out).
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