Mini Budget – The Headlines
The Chancellor, Kwasi Kwarteng, today (23/09/22) announced a package of tax cuts worth £45 billion as he set out his plan to boost economic growth. The Mini Budget headlines included:
- Top rate of income tax (45%) for high earners to be scrapped and replaced with a 40% rate from next year.
- Basic rate of tax reduced from 20% to 19% to be introduced in April 2023 – one year earlier than previously planned.
- The proposed increase in corporation tax from 19% to 25% next year has been cancelled.
- The 1.25% percentage point increase in National Insurance will be scrapped from November 2022 for employees and employers.
- The current level of £125,000 (property value) at which stamp duty becomes payable will be increased to £250,000. First-time buyers will not pay stamp duty up to £425,000, an increase from the current level of £300,000.
- The planned increases in the duty rates for beer, cider, wine and spirits will also be cancelled.
- VAT free shopping for overseas visitors to be introduced.
- Approximately 40 new investment zones will offer relaxed planning rules and tax breaks on National Insurance, investment, stamp duty and business rates.
- £500m to be put into “new innovation funds” with the view to boost investment into science and technology.
- The Annual Investment Allowance (AIA) will remain at £1m instead of falling to £200,000.
- Venture Capital Trust (VCT), Enterprise Investment Scheme (EIS) and Seed Enterprise Investment Scheme (SEIS) will be safeguarded beyond 2025 (previously subject to closure in 2025).
- From April next year, the amount companies can raise through Seed Enterprise Investment Scheme (SEIS) will rise from £150,000 to £250,000, and the annual investor limit will be doubled to £200,000. The gross asset limit will rise to £350,000, and the age limit extended from two to three years.
- Bankers’ bonus cap to be scrapped
- 2017 and 2021 reforms to IR35 self-employment rules (employers required to assess IR35 status) to be scrapped.
- The Energy Markets Financing Scheme will provide loans to cash-strapped energy suppliers while businesses will benefit from a discount on their bills.
As with all budget announcements, the devil is in the detail and we will continue to inform you of any further points should they arise.