The new Chancellor of the Exchequer, Kwasi Kwarteng, delivered his first budget on September 23rd. This ‘mini-budget’ update turned out to be of great significance as it included the largest round of tax cuts in over 50 years.
As further details are finalised, here are the key points from the budget update:
- Top rate of income tax for the highest earners in England will be abolished. Those on more than £150,000 a year will no longer pay 45% but instead the lower 40% rate applicable to those on over £50,271. As Scotland is in control of their own tax bands we will need to wait and see if the Scottish Government choose to amend the highest tax rate.
- In England their reduction of basic rate of income tax to 19% will be brought forward to April 2023, one year sooner than originally planned. Once again, we will need to wait and see if the Scottish Government choose to amend their basic rate tax band.
- Planned increase to corporation tax scrapped, therefore it will remain at 19%.
- Stamp duty in England has been cut with the limit raised to £250,000 or £425,000 for first time buyers, which means 200,000 fewer people will pay the tax on house purchases.
- VAT-free shopping introduced for overseas visitors.
- The planned duty rates increase on beer, wine and spirits has been cancelled.
- IR35 off payroll plans are to be abolished for both the public and private sector from April 2023.
- The Annual Investment Allowance will remain at £1million from April 2023 rather than reverting to £200,000.
- New investment zones will offer businesses tax cuts and reduced regulation across the UK. 38 local authorities are currently in discussion to establish ‘investment zones’ in England, with plans to expand these across Scotland, Wales and Northern Ireland. Businesses in the designated sites will benefit from a raft of tax incentives, while construction will receive fast track planning applications.
As further detail is announced over the coming weeks we will endeavour to keep our clients up to date with the latest changes.