The mini budget at a glance
Inflation is the highest it’s been for 30 years, interest rates the highest for 14 years and the pound has sunk to its lowest rate against the dollar following Kwasi Kwarteng’s mini-budget speech on Friday 22nd September.
With the Ukraine war fuelling energy price inflation and the cost of living rising each week, many people are concerned about the winter ahead and wondering how to make their income stretch to all the bills. This blog post looks at some of the announcements that are likely to have the biggest impact on your personal and business situation.
Personal tax and National Insurance cuts
The basic rate of income tax will be reduced by 1% to 19% from April 2023. In addition, the recent 1.25% rise in NI will be reversed from 6 November. The additional rate of income tax of 45% for high earners is abolished from April 2023. This will apply to an estimated 629,000 individuals in the UK with incomes in excess of £150,000. The new Health and Social Levey to pay for the NHS is also scrapped.
Social care and benefits
People on Universal Credit working the equivalent of 15 hours or less (24 for couples) are expected to meet regularly with a work coach and take “active steps” to boost their pay. This change, which applies from January 2023, is expected to bring around 120,000 more people into the intensive work search regime.
Jobseeker aged over 50 will be encouraged to return to work with the help of a work coach.
Corporation tax
The planned increase in April 2023 in corporation tax from 19% to 25% is cancelled.
Business
New and start-up companies can raise up to £250,000 under the SEIS scheme which has been extended from April 2023.
Regulations have been changed to allow pension funds to increase UK investments.
The Annual investment allowance (AIA), which provides for 100 per cent tax relief on capital investment in qualifying plant and machinery up to a set expenditure limit, remains at £1m indefinitely. The 130% super-deduction which is due to end on 31 March 2023 has not been extended.
IR35 rules are to be simplified with the 2017 and 2021 reforms being repealed.
Share options for employees doubled from £30,000 to £60,000.
Bankers' bonuses
Rules which limit bankers' bonuses have been scrapped.
Homes and energy
Stamp duty thresholds have been changed. There is no stamp duty on the first £425,000 for first time buyers with effect from 23rd September.
The rates are now:
0%: £0 - £250,000 (£425,000 for first time buyers)
5%: £250,000 - £925,000
10%: £925,000 - £1,500,000
12%: £1,500,000+
Energy prices are capped for two years at 34p per kWh of electricity and 10.3p per kWh of gas used which means that an average house with average consumption will pay no more than £2,500 a year. Businesses, charities and the public sector will also receive a price cap guarantee.
Duties
The chancellor also announced in his mini-budget that the planned increase in duties on beer, wine, cider and spirits has been scrapped. VAT-free shopping for overseas visitors has been reinstated.
Infrastructure and investment zones
Businesses will receive tax cuts and relaxed planning restrictions in new investment zones across the country where business rates and stamp duty will be waived. New legislation will be brought in to cut planning rules, get rid of EU regulations and environmental assessments to speed up building.
How does the mini-budget affect you or your business?
If you aren’t sure how you can take advantage of the changes announced during the mini-budget, speak to David Masih, our client relationship partner who can talk to you about the impacts. Call 03330 067 123 or email info@onthegoaccountants.co.uk.
