What Was Announced in the Chancellor’s Emergency Mini Budget?
This post on the mini-budget was initially issued on 23 September 2022 and was updated on 18 October 2022 for freshness, accuracy and comprehensiveness.
On 23 September, the Chancellor, Kwasi Kwarteng, revealed some tax cuts as part of his emergency mini-budget revealed as The Growth Plan.
Following the turmoil in the financial markets, the Government has reversed almost all the tax measures. Kwarteng was also replaced by Jeremy Hunt and became the second shortest-serving Chancellor in UK history after surviving only 38 days.
Here is what is now happening with each of the measures announced in the mini-budget.
Income Tax
What was announced in the mini-budget:
- The government was going to cut the basic income tax rate to 19% from April 2023.
- The 45% higher income tax rate for earnings over £150,000 was going to be abolished for England, Wales and Northern Ireland taxpayers.
What has changed:
- The basic rate of income tax will remain at 20%.
- The cut is no longer going ahead, and the 45% higher income tax rate will remain.
Corporation Tax
What was announced in the mini-budget:
- The Chancellor had planned to cancel the rise of corporation tax to 25% from April 2023.
What has changed:
- The rise will go ahead as planned, and the corporation tax will increase to 25% in April 2023.
IR35
What was announced in the mini-budget:
- The government had promised to change the IR35, so companies were no longer responsible for ensuring their contractors were paying the right amount of tax.
What has changed:
- The reform will no longer go ahead, and the rules surrounding IR35 will remain the same.
National Insurance (NI)
Effective 6 November, the Chancellor is removing the 1.25% NI Contributions increase, which was earmarked for the Social Care Levy.
Annual Investment Allowance
The £1 million allowance will remain permanent rather than returning to £200,000 in March 2023. This gives 100% tax relief to businesses on their plant and machinery investments up to the higher £1 million limit.
Stamp Duty/Land Transaction Tax
Stamp duty has been cut for those in England and Northern Ireland. No stamp duty will be due on the first £250,000, and for first-time buyers, that rises to £425,000.
For those in Wales, the starting threshold for paying the main residential rates of LTT increases from £180,000 to £225,000, and the first tax band will cover transactions from £225,000 to £400,000, taxed at 6% on the amount over £225,000.
Seed Investment Scheme (SEIS)
New companies will now be able to raise up to £250,000, giving tax relief to investors.
Further changes to the fiscal policy will be announced on 31 October as part of the Autumn Budget.
If you have any questions about how the changes in the mini-budget affect you, please contact us.
