The strong theme of the new Chancellor, Kwasi Kwarteng’s first budget has been the stimulation of growth. The mini-budget 2022 (not so mini) is designed to boost economic growth through tax cuts, which will be paid for by increasing the UK’s national debt.
UPDATE 3 October: *since the mini budget on Friday 23rd September, the government have made a U turn on abolishing the 45% high rate of income tax
We saw the biggest tax cuts in the UK since 1972. The Treasury has described the statement as a “fiscal event” because the Office of Budget Responsiblity had not been asked to provide analysis of the measures announced.
Mini Budget 2022 Key Points
- Cut in the basic rate of income tax to 19% from April 2023
- 45% higher rate of income tax abolished for higher earners in England, Wales and Northern Ireland from April 2023 *(in a statement on 3/10/22, this has subsequently been reversed and teh 45% higher rate of income tax will NOT be abolished)
- From 6 November, reverse of the 1.25% rise in National Insurance introduced in April 2022
- Plans to introduce the Health and Social Care Levy from April 2023 scrapped
- Plans to increase corporation tax from 19% to 25% in April 2023 are scrapped
- Around 120,000 more people on Universal Credit to be asked to look for more work or face benefit sanctions
- People over 50 will be given more time with job coaches to help them find work
- IR35 rules governing off-payroll work to be simplified
- Annual tax-free corporate investment allowance to remain at £1m indefinitely
- Regulations change so pensions funds can increase UK investments
- Tax relief for investors allowing new and start-up companies to raise up to £250,000 of invesment
- Share options for employees doubled from £30,000 to £60,000
- Stamp duty threshold lifted to £250,000 with immediate effect (£425,000 for first time buyers)
- A freeze on energy bills that will cost an estimated £60bn over six months, and forecast to reduce inflation by 5%
- The limit on bankers’ bonuses is scrapped
- VAT-free shopping for overseas visitors
- Scrapping of planned increases in the duties on beer, cider, wine and spirits
- Plans for investment zones in England, with 38 initially proposed
- Liberalising of planning laws and scrapping of EU planning regulations
Here is our detailed downloadable sumary of the Mini Budget 2022
Dividend Tax Rates: Note to consider
One point that we would consider is as dividend tax rates will be cut from April 2023, if you are considering taking a large dividend it may be beneficial for you to wait to issue a dividend until this point.
If you would like advice on corporation or personal Tax or any other aspect of tax planning or trust registration, please do contact us – the HB team is here to help with all your tax, cash flow, MTD VAT, and accounting questions and can help you make your money work harder for you and your business. If you would like to talk about how we can help you and your business, please feel free to contact the team on 01992 444466.
We’re accountants for business and we’re here to help you survive and grow.
The information contained above is for general guidance purposes only. Whilst every effort has been made to ensure the contents are accurate, please note that each individual has different circumstances and it is essential that you seek appropriate professional advice before you act on any of the information contained herein. HB Accountants can accept no liability for any errors or omission or for any person acting on or refraining from acting on the information provided in the above
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