On Friday 23 September the new Chancellor, Kwasi Kwarteng, delivered his first major fiscal announcement to parliament.
The major points are outlined below.
- Cut in basic rate of income tax to 19% from April 2023
- Government estimates 31 million people getting £170 a year more
- Currently, people in England, Wales and Northern Ireland pay 20% on any annual earning between £12,571 to £50,270 - rates in Scotland are different
- 45% higher rate of income tax abolished for England, Wales and Northern Ireland taxpayers
- One single higher rate of income tax of 40% from April next year
- Reverse recent rise in National Insurance (NI) from 6 November
- Workers and employers have paid an extra 1.25p in the pound since April
- New Health and Social Care Levy to pay for the NHS will not be introduced
- Cancel UK-wide rise in corporation tax which was due to increase from 19% to 25% in April 2023
- Rules around universal credit tightened, by reducing benefits if people don't fulfil job search commitments
- Around 120,000 more people on Universal Credit to be asked to take steps to seek more work, or face having their benefits reduced
- Jobseekers over 50 to be given extra time with work coaches to help them return to job market
Work and investment
- IR35 rules - the rules which govern off-payroll working - to be simplified
- Annual investment allowance, the amount companies can invest tax free, remains at £1m indefinitely
- Regulations change so pensions funds can increase UK investments
- New and start-up companies able to raise up to £250,000 under scheme giving tax relief to investors
- Share options for employees doubled from £30,000 to £60,000
- Cut to stamp duty which is paid when people buy a property in England and Northern Ireland
- No stamp duty on first £250,000 and for first time buyers that rises to £425,000 - comes into operation today
- 200,000 more people will be taken out of paying stamp duty altogether, government claims
- What are the new stamp duty rates?
- Freeze on energy bills, which the government claims will reduce inflation by 5 percentage points
- Total cost for the energy package expected to be around £60bn for the six months from October
- Rules which limit bankers' bonuses scrapped
- Package of regulatory reforms to be set out later in the autumn
Infrastructure and investment zones
- Government discussing setting up investment zones with 38 local areas in England
- Tax cuts and liberalised planning rules to be offered to release land for housing and commercial use
- Investment zones offered measures such as no business rates and stamp duty waived
- New legislation to cut planning rules, get rid of EU regulations and environmental assessments in an effort to speed up building
- VAT-free shopping for overseas visitors
- Planned increases in the duties on beer, for cider, for wine, and for spirits cancelled
Overall this mini budget appears to do little for the majority of small businesses with most of the measures targeted at larger corporate organisations and high earners.
In our opinion these measures are unlikely to ease the economic and supply chain pressures that most UK businesses are already facing in 2022.
If you’d like to talk to us about how these changes affect your business, please do get in touch. We’ll be happy to help you start planning a 2023 strategy to overcome your biggest business challenges and help you to create a plan for growth.