Kwasi Kwarteng delivered his mini-Budget as Chancellor on Friday 23 September.
The Chancellor made his first fiscal statement since taking office, on Friday 23 September. In the midst of such a volatile economic climate, Kwasi Kwarteng announced a radical shift in the UK’s fiscal policy.
At a time when households and businesses are suffering from record energy prices, eye-watering inflation and a looming recession, the public have awaited the first mini-budget since Liz Truss became Prime Minister. So, what was announced today and how will it affect you?
The most highly-anticipated announcement to come out of the Emergency budget was the support with the energy cost rises for households and businesses. The Energy Price Guarantee (EPG) will cap the unit price that consumers pay for electricity and gas, to a maximum of £2,500 for the average household. This is expected to save households £1,000 per annum, plus the £400 support that all households will receive from the Energy Bills Support Scheme this winter. Making a total saving of £1,400. Here are a further 5 key points from today’s budget and how they might affect you…
Personal Tax Cuts
- Basic rate of income tax is being cut from 20% to 19% in April 2023, one year earlier than expected.
- The 1.25% rise in National Insurance that was introduced under the former Chancellor Rishi Sunak, has now been reversed by Chancellor Kwarteng. This will take effect from 6th November and will save 28 million taxpayers an average of £330 per annum.
- The Additional rate of Income Tax and Dividend tax will be completely abolished.
Stamp Duty Land Tax To support home ownership and growth, Kwarteng announced the cut to Stamp Duty Land Tax (SDLT). Previously, SDLT was not payable on the first £125,000 of any property purchase. Following the announcement, this threshold has now doubled to £250,000 for all home purchases. The threshold at which SDLT was paid for first-time buyers has now increased to £425,000 from £300,000. The government has also increased the value of the property on which first time buyers can claim relief from £500,000 to £625,000.
Investment and Enterprise ZonesEnterprise zones are designed to provide government support to encourage investment and economic growth. It is expected that there will be some relaxation of some planning regulations in these zones, and a number of further tax incentives will be provided.
Corporation Tax FreezeFrom April 2023, Corporation tax was due to increase to 25%, this rate increase has been cancelled and the Corporation tax rate is being maintained at 19%, as government set sights on 2.5% trend rate of growth.
Annual Investment AllowanceCurrently the Annual Investment Allowance (AIA) for businesses has a temporary limit of £1,000,000. This means that each year, businesses can spend up to £1,000,000 on qualifying plant and equipment, and offset 100% of the cost against their taxable profits. In April 2023, this limit was set to reduce back down to £200,000 however the Chancellor announced that the current £1,000,000 limit would become the new permanent limit.
Some Budget proposals may be subject to amendment in subsequent Finance Act(s). You should contact us before taking any action as a result of the contents of this summary.