The markets reacted sharply to Chancellor Kwasi’s mini-budget announcements. One of the changes announced has since been re-evaluated and, on 3 October 2022, a U-turn was announced.
The Chancellor has confirmed that the 45% tax cut will now not go ahead.
From 6 April 2023, those earning over £150,000 will continue to pay the top rate of 45% income tax. However, it would appear that the dividend tax rate for those with income over £150,000 will pay 38.1% income tax from 6 April 2023, a reduction of 1.25% from the current top rate of dividend tax of 39.35%.
There’s still an incentive, albeit a smaller one, to delay dividends for those with income in excess of £150,000 until after 6 April 2023.
The Chancellor is set to announce his medium-term fiscal plan on 23 November 2022 which will be accompanied by an Office for Budget Responsibility (OBR) forecast. However, there are rumours that this announcement will be accelerated to this month in an attempt to reassure markets. Another U-turn perhaps?
At the time of writing, there is no indication that this announcement will bring further tax changes we should expect the next budget to happen in the Spring which we hope, this time, will be accompanied by another OBR forecast.
As ever, we shall keep you informed with the latest news
