For a mini budget it certainly contained some big announcements. It also demonstrated the divisions within the government as to how to fight the cost of living crisis. Here are some of the key announcements:
- The chancellor confirmed the abolition from 6 November 2022 of the recent National Insurance increase, along with the Health and Social Care Levy that was due to take effect from 6 April 2023. These measures, the government say, will save nearly 28 million people an average of £330 per year.
- The basic rate of Income Tax will reduce from 20% to 19% from 6 April 2023, a year earlier than planned.
- The additional Income Tax rate of 45% on taxable income over £150000 will be abolished and revert to the higher rate tax rate of 40%.
- Dividend tax rates will reduce by 1.25% from 6 April 2023 to 7.5% / 32.5% / 38.1% depending on taxable income.
- The planned Corporation Tax rise to 25% from 1 April 2023 has been scrapped and the rate will remain at 19%.
- The proposed reduction in the amount that a business can get tax relief on plant and machinery purchases has been shelved. Businesses will be able to spend up to £1 million per annum and obtain full tax relief.
- IR35 regulations relating to “off payroll working” which were introduced in 2017 and 2021 are to be scrapped from April 2023.
- Stamp Duty Land Tax will not be payable on the first £250000 of a property purchase and relief for first time buyers increases to £425000. The changes are effective from today.
- The planned VAT rate increases for beer, cider, wine and spirits will all be cancelled.
The above give aways and the £60 billion cost of energy package announcements are potential vote winners, but will have to be paid for at some point in the future, so it looks like short term gain, long term pain.
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