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A surprising “mini” Budget

Article

A surprising “mini” Budget

28 Sep 2022

2 minute read

On 23 September the new Chancellor, Kwasi Kwarteng stood up at the unusual time of 9:30 to deliver his Growth Plan speech which many have termed a “mini” Budget.

A surprising “mini” Budget - news article image

On 23 September the new Chancellor, Kwasi Kwarteng stood up at the unusual time of 9:30 to deliver his Growth Plan speech which many have termed a “mini” Budget.

This speech delivered a number of pre-announced measures but also a couple of surprise announcements leading many to surmise that this was a Budget for the rich. We have briefly outlined below the main announcements made.

National Insurance

In September 2021, the Chancellor introduced proposals for a Health and Social Care Levy. From April 2022 this meant an increase to all National Insurance Rates of 1.25% which would have been reversed in April 2023 with the introduction of a standalone 1.25% Health and Social Care Levy.

The new Chancellor has completely scrapped these changes with NIC rates falling back to their original rates in November and no additional Health and Social Levy introduced next year. The level of funding in this area will however be maintained at the same level however now funded from general taxation.

Income Tax

The proposed cut in the basic rate of income tax from 20% to 19% has now been brought forward a year to be effective from 6 April 2023.

Perhaps the more surprising announcement made on 23 September in order to “incentivise enterprise and hard work and simplify the tax system”, the Chancellor decided to scrap the additional 45% rate band of tax – just 10 days later however, this policy decision was reversed and the 45% additional tax rate will now remain in place for the foreseeable future.

Corporation Tax

The intended corporation tax increase to 25% from April 2023 has now been scrapped meaning that most companies will continue to pay a flat rate of 19% which is the lowest in the G20.

Capital Allowances

The Annual Investment Allowance provides a 100% write off on purchase of certain types of plant and machinery for companies and sole traders. The limit of this relief has been set at £1m in any 12 month period however was scheduled to drop to £200,000. The £1m limit will now become permanent.

Stamp Duty Land Tax

Various changes were announced to the SDLT rates, including an increase in the 0% threshold increased from £125,000 to £250,000 for all residential property purchasers. Increases were also made to first time buyers relief however no change was made to non-residential rates of tax.

These changes will apply to transactions on or after 23 September 2022 in England and Northern Ireland. The changes do not apply in Wales or Scotland which have their own land transaction regimes.

Other changes

There were a number of other announcements made, including a change to the IR35 and off-payroll reporting rules, SEIS investment limits and increased limits for employees benefitting under a Company Share Option Plan.

It has been widely reported that further tax cutting measures may be on the table however time will tell the extent or details of any future changes made by the new Chancellor.

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