The Chancellor of the Exchequer, Kwasi Kwarteng, has announced a series of tax cuts in his first mini-budget, including a £60 billion energy relief package and the removal of the 45% higher rate of income tax.
Here are some of the highlights, as the Chancellor sets out his plans to grow the economy by 2.5% annually in the medium-term, through a mix of tax incentives and reforms:
- The proposed 25% rise in corporation tax will be scrapped and instead remain at 19%
- From April 2023 the basic rate of Income Tax will be cut from 20% to 19% and the previously proposed 45% additional rate will be abolished completely to attract global talent and incentivise enterprise
- The recent increase in National Insurance will be reversed from November
- A cap on bankers’ bonuses will be scrapped
- An energy price guarantee will see domestic bills of around £2,500 a year, for an average household
- Alcohol duty will be frozen from February 2023 in an attempt to help the hospitality industry bounce back
- A new VAT-free shopping scheme for international tourists, will be set up to support high streets, shopping centres and airports, and create jobs in the retail and tourism sectors
- The Company Share Option Plan (CSOP) limit, which allows businesses to offer employees share options, will be doubled from £30,000 to £60,000
- Widening of the criteria of the Seed Enterprise Investment Scheme (SEIS), including allowing firms to now raise £250,000 under the scheme – 66% more funding than previously – to help businesses access the finance they need to grow
- 38 new investment zones will be set up across the UK. These geographic zones will be allowed to reduce business taxes to help them encourage investment
- The level at which house buyers start paying stamp duty will double to £250,000. The threshold for first-time buyers will be increased from £300,000 to £425,000. And the value of the property on which first-time buyers can claim relief has also been increased, from £500,000 to £625,000
- The Office of Tax simplification is to be abolished, as the Chancellor plans to mandate HM Treasury and HM Revenue & Customs to focus on simplifying the tax code instead.
We will be analysing the ‘Growth Plan 2022’ policy paper in more detail and producing a report outlining how today’s changes may impact our clients and their businesses. If you are not yet a client of the Beavis Morgan group, but would like to receive a copy of this report, please email firstname.lastname@example.org.
While the tax environment remains convoluted and confrontational, our experts at Beavis Morgan understand the demands placed on businesses and we work at understanding you, your business and its unique issues, so as to provide the right advice and solutions to help you improve your net worth and increase growth and profitability.
Our diverse team of tax professionals are committed to ensuring that your tax reporting obligations are fully satisfied and that every opportunity to lawfully exploit tax savings is made known to you, restructuring your affairs in a tax effective and efficient way.
You can also read the full ‘Growth Plan 2022’ policy paper here.