Formar Chancellor Kwasi Kwarteng announced “the biggest package in generations”. With total tax cuts expected to exceed £45bn over the next 5 years, this ‘mini’ budget ended up costing Kwasi and Liz their jobs!
We have studied today’s announcement and analysts’ comments and have highlighted below what we believe to be the most key and relevant points for our clients.
Income Tax & National Insurance
The key points on personal taxes are as follows:
- The 1.25 percentage point increase in national insurance announced in the prior budget has been scrapped. The Chancellor suggests that this will be a saving of £330 per year on average. This change comes into effect from 6th November 2022.
- There were no changes announced in respect of Personal Allowance (the amount of income a person earns before paying tax) which will remain frozen at £12,570 for the next four years, as per the prior budget.
Corporation Tax
The key points on company taxes are as follows:
- The Annual Investment Allowance (AIA) for capital allowances will now be set at £1m permanently. This was previously set to return to £200k in March 2023.
- As mentioned previously the scrapped increase of national insurance is beneficial to company owners too. The reduction in employers’ national insurance will directly reduce employment costs for all UK companies.
Energy Bills
As announced previously, the Energy Price Guarantee will cap the unit cost of energy for only 6 months. This should ensure a typical household receives annual bills of around £2,500 during this period.
Stamp Duty
Stamp Duty has received some significant cuts, with stamp duty being scrapped on property purchases up to £250k, which is double the previous amount of £125k. First-time buyers get an exemption on properties up to the value of £425k. These changes are effective today.
Bad news for those that like their booze!
Alcohol Duty will not be frozen from February 2023.
