The Mini Budget – apparently the biggest tax-cutting event in 34 years, just how many rabbits were there in Kwasi’s hat?
A fiscal event without the red box – that will still come later in the year when the Office of Budget Responsibility publishes its full fiscal forecast. We knew about the reversal of the 1.25% increase in National Insurance and the scrapping of the Health and Social Care Levy yesterday; we were also expecting the government to abolish the planned hike in Corporation Tax which they did – but we were not expecting:
- The abolition of the 45% additional rate of Income Tax to re-introduce a single higher rate of Income Tax of 40% from April 2023
- The dividend additional rate will also be removed and aligned with the upper rate of 32.5% from April 2023
- The reduction of the basic rate of Income Tax to 19% from April 2023 – a year earlier than anticipated
- The immediate increase in the Stamp Duty Land Tax threshold to £250,000 and further increased for first-time buyers
- The extension of the 100% tax relief for qualifying plant and machinery purchased up to the Annual Investment Allowance limit of £1m
Rising inflation, interest rates, and energy bills are increasing costs so, in addition to the measures announced above and the introduction of an Energy Price Guarantee, there will be no increases to duty on alcohol. The £400 energy rebate will materialise over the forthcoming months and the cut in SDLT should also help more families and first-time buyers purchase their own homes.
There were more rabbits in that hat than we were expecting! It’s all about boosting the country’s economic growth and increasing confidence. Tax simplification is always welcomed (especially with regards to IR35 and Off-Payroll working arrangements) but there’ll be yet another software change – from 6 November – for Payroll operators to grapple with this tax year alone!
‘A new approach, for a new era’ – a huge day for our new PM and chancellor as they set the UK economy on a new course.
If you would like to know more about how the ‘not so’ mini budget announcements affect you, your family, and your business – speak to your usual CKLG contact on 01223 810100.
Thought should be given as to when dividends are extracted, benefits are awarded and bonuses are granted.
