This morning Chancellor Kwasi Kwarteng announced his 'mini-budget' with a wide ranging list of measures designed to help individuals and businesses with rising inflation, energy costs and to stimulate economic growth.
The Chancellor's growth plan announced lots of tax cutting, with almost £45 billion of tax cuts to be delivered by 2026-27.
The highlights of this 'mini-budget' include:
The April 2023 rise in corporation tax to a top rate of 25% has been scrapped. The rate will therefore remain at 19%.
The annual investment allowance, which was due to reduce to £200,000 from April 2023, will instead remain at £1 million.
The off-payroll working reforms will be repealed from 6 April 2023. Therefore, workers providing their services via an intermediary will once again be responsible for assessing their IR35 status and for paying the correct amount of tax and national insurance.
From April 2023 the basic rate of income tax will reduce from 20% to 19% and the additional rate of 45% (payable on income above £150,000) will be abolished. Therefore, the top rate of income tax will be 40%.
National insurance contributions (NICs)
The recent NIC rise of 1.25% is to be reversed from 6 November this year and the Health and Social care levy (which would have replaced the 1.25% increase) will also be cancelled. The 1.25% increase to tax on dividends, introduced to ensure dividend income was subject to a 1.25% increase, is also being reversed.
Stamp duty land tax (SDLT)
With immediate effect, the SDLT residential threshold of £125,000 is increased to £250,000. This means that the 0% band is extended to £250,000 for buyers not paying the 3% surcharge. For buyers paying the surcharge (e.g. companies and second home buyers) the 3% band is also extended to £250,000. This represents a potential saving of up to £2,500 per property. These changes could have a significant impact on whether a multiple dwellings relief claim should be made and transactions which have already exchanged but not yet completed.
In addition, the first time buyer nil rate threshold has increased from £300,000 to £425,000 and the maximum value of a property on which this relief can be claimed has increased from £500,000 to £625,000.
Generous incentives have been introduced for investment zones, including full SDLT relief on land acquired for commercial or residential development, full business rates relief on newly occupied and expanded premises, zero employer NICs on new employee earnings up to £50,270, 100% enhanced capital allowance relief and accelerated enhanced structures and buildings allowance relief of 20% a year.
From April 2023 companies will be able to raise up to £250,000 of seed enterprise investment scheme (SEIS) investment (an increase from £100,000) with the gross asset limit increasing to £350,000 and the age limit from 2 to 3 years. Qualifying companies can issue up to £60,000 of company share option plan (CSOP) options (an increase from £30,000).