Chancellor Kwasi Kwarteng’s much-anticipated mini budget finally arrived on Thursday 22 September. Created in a bid to stave off a financial crash and to help homeowners through the cost of living crisis, the mini budget was one of the most radical in years.

One of the headline policies concerned National Insurance – but what exactly has changed? And how might these changes affect you? Let’s take a closer look.

What’s changing?

National Insurance rose by 1.25% in April, but this increase has been reversed. Effective from 6 November, the change will put more money in everyone’s pockets – but exactly how much will depend on how much you earn.

How will I benefit?

According to the Government, nearly 28m people will benefit from the policy, on average keeping £330 more of their earnings during the course of 2023. Businesses also stand to benefit – 920,000 of them. On average, each business is expected to save almost £10,000 next year.

Exactly when employees will feel the benefit depends on the “complexity of their employer’s payroll software,” according to the Treasury. Some will notice it in November, others December or January.

The National Insurance and tax cuts announced in the mini budget have attracted some criticism, because they apply equally to the rich and the less well off: the more you earn, the more you stand to benefit from the budget. For example, those earning £1m annually will receive an additional £55,000 a year, while those on £25,000 will only notice a £280 increase in their annual earnings.

Small business accountants in Ely

Want advice on the entirety of the mini budget and how it might affect you? Whether you’re a contractor, freelancer, are self-employed or run a small business, our specialist accountants in Ely are here to help. To arrange a free initial consultation, get in touch today.

Change, while often a good thing, can leave us feeling a little uneasy and wary – especially when it relates to something as critical and fundamental as your company’s taxes. That’s exactly what Making Tax Digital is focused on, but – although it means altering some of your processes – this is a change for the better.

But before we get into the ‘why,’ let’s tackle the ‘what.’ If you’re unfamiliar with the concept of Making Tax Digital, it’s essentially a government initiative which is mandating the switch from paper-based tax systems to an entirely digital one. This already applies to VAT, and will in future be a requirement for income tax, self-employment tax and corporation tax.

If you are notifying HMRC of a decision to opt to tax land and buildings, you are normally required to notify HMRC within 30 days. The 30 day deadline was temporarily extended to 90 days to help businesses and agents during the pandemic, but that temporary extension has now ended for decisions made from 1 August 2021 onwards.

HMRC have recently updated their guidance on accounting for VAT on goods imported from outside the UK which, since Brexit, includes the European Union.

Last month we mentioned that draft legislation has been published to change the basis periods for the assessment of self-employed profits to coincide with the tax year. The proposed new rules provide that from 2023/24 onwards profits or losses will be apportioned to tax years where the period of account does not coincide with the tax year. This is intended to coincide with the start of Making Tax Digital for income tax.