There will be a one-year transitional period for Relief at Source pension schemes, permitting them to continue claiming tax relief at the 20% rate for the 2023/24 tax year. This will create a further anomaly between schemes that utilise Relief at Source and those that operate the Net Pay Arrangement.
The tax cuts do not automatically apply to Scotland, where income tax rates and bands are decided by the Scottish Government. It will set out its decisions on tax when it publishes its own Budget later in the year.
National insurance
As was announced the day before the mini Budget, the Government will reverse the 1.25% increase in employee and employer NI, introduced for the 2022/23 tax year, from 6 November 2022. However, the threshold at which individuals start to pay NI will remain at £12,570, the level it was increased to from 6 July 2022.
In addition, the planned Health and Social Care Levy which was due to replace the NI increase as a new standalone tax from April 2023, has been cancelled. The funding for health and social care will now come from general taxation.