Mini Budget – What’s new, apart from the Chancellor?

 

• The cost of energy

The energy price guarantee will limit bills for the average household to £2,500.

For businesses, the government has introduced the energy bills relief scheme. This will provide a price guarantee equivalent to the one for households.

And, thirdly, the government is announcing an energy markets financing scheme. This will offer emergency liquidity to traders.

Whilst we were expecting this for households it is a welcome addition that businesses too will benefit from a similar cap. This should go a long way to help limit the rising costs of business’ and to allow capital to be spent elsewhere.

• Planned increase in corporation tax cancelled

Next year’s planned increase to 25% corporation tax will be abandoned.

The idea being low taxes encourage investment, and will stay at 19%.

Again a decision which will be widely welcomed. Questions were always raised over the logistics of the planned corporation rate increase, it appears that the key theme of this Mini Budget being simplification of the UK tax system, has no doubt bolstered this decision.

• Annual investment allowance decrease, scrapped

Annual investment allowance will not be cut as planned and remain at £1,000,000.

Not something we thought would be addressed, but likewise with simplification of the tax system the other main theme of the budget-  to encourage growth,  has no doubt driven this reversal.

•  National insurance rate increase reversed

The national insurance increase is being reversed from November. Also dividend tax will revert to 7.5%/ 32.5%.

Another tax saving for businesses and individuals alike. Although the increase didn’t seem like a huge rise, the take home pay and reduction in costs for businesses is something we feel will be welcomed.

• Stamp duty being cut from today

Stamp duty is being cut. No stamp duty will be paid on the first £250,000 of a property, and for first-time buyers the threshold will be £425,00, he says.

The measure will take more than 200,000 buyers out of paying for stamp duty altogether.

After the dizzy heights of the post covid housing boom, and with the housing market no where near back to normality, will this change cause more harm than good? Whilst this will take 200,000 buyers out of paying stamp duty all together,  could this again cause the second home market to increase?

• Additional rate tax is being abolished along with cut to basic rate of tax to 19% from April 2023

Meaning we will have two tiers of tax 19% & 40%

Definitely a simplification of the system, and the reduction in the basic rate of tax to 19% will again increase individuals take home pay.  

 

 

What are your thoughts? Will this encourage the growth intended? What to do now?

If you’re wanting to know exactly what this means for you and your business why not contact us for a full cost analysis and forecast? It could be the best investment you make!

 

 

Author Emma Henderson Partner LLB Hons FCCA