MINI BUDGET 2022 – KEY POINTS AT A GLANCE

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Following the Bank of England’s announcement to raise interest rates by 0.5 percentage points to 2.25% yesterday, Kwasi Kwarteng made his first budget-related appearance in Parliament today.

In delivering many of Liz Truss’s aspirations for her new government, the Chancellor said his budget was centred on ‘a new approach for a new era focused on growth’, with his aim over the medium term being to reach a trend rate of growth of 2.5% and to expand the supply side of the economy through tax incentives and reform.

Whilst referred to as a mini budget, the changes amount to the biggest tax cut of any budget since 1972. Below is an overview of the key points announced:

TAX

  • The top rate of income tax has been abolished – from next year, the UK will have a single higher rate of income tax of 40% with the additional rate of 45% being scrapped
  • The basic rate of income tax will be reduced from 20% to 19% from April 2023
  • The planned 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, saving workers on average £330 per year
  • There was no change to previous plans to hold the personal tax-free allowance at £12,570 for the next four years
  • Reforms to off-payroll working rules, known as IR35, will be rescinded from April next year, meaning workers, rather than businesses or public authorities, will once again be responsible for determining their IR35 employment status
  • Homebuyers will not pay stamp duty on the first £250,000 of the property’s value, instead of the current level of £125,000
  • First-time buyers will not pay stamp duty up to £425,000, up from £300,000
  • Planned increases in the duty rates for beer, cider, wine and spirits will be cancelled

BUSINESS INVESTMENT

  • The Chancellor announced the Government will liberalise the planning process to help speed up investment
  • New investment zones will be created to lure in businesses to almost 40 areas through relaxed planning rules and tax breaks on national insurance, investment, stamp duty and business rates
  • Reforms of the pension charge cap will unlock pension fund investment, while £500m will give support to “new innovative funds” to boost investment in science and tech
  • The Annual Investment Allowance, a tax break on investments in plant and machinery, will remain at £1m rather than falling to £200,000
    Schemes aimed at increasing investment in start-ups have been extended beyond 2025, including the Enterprise Investment Scheme

If you would like to discuss the implications of today’s announcements on your finances, please contact Nathan Mead-Wellings on 020 8057 8142 or by email at nmw@finura.co.uk.

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