Not really a mini-Budget as it turns out today as even though there were no economic forecasts provided, there were sweeping major tax changes announced. You can use our calculator below to see how this effects you as basic rate tax has been cut to 19 percent (from 20 percent) and the top rate band of tax is to be removed. The NIC rate increase is also now reversed.
It was the biggest tax cutting budget in five decades delivered by a newly enlisted Chancellor, Kwasi Kwarteng, gambling on cutting taxes and red-tape to stimulate growth in the economy allowing inflation to taper back down and cut interest rate hikes eventually - but will it work or will it be disastrous?. Only time will tell.
Here is a summary of what Kwarteng announced backed by his pushing enterprise inspired PM:
Taxes and Duties
- Corporation tax to remain at the low 19 percent next April.
- Basic rate of income tax cut to 19 percent from the current 20 percent, starting April 2023.
- Top rate of tax abolished. The 45 percent tax band was introduced in the 2013/2014 tax year and hit incomes over £150,000.
- NIC rate rise of 1.25 percent for the health levy is reversed. Health levy is abolished also.
- Cancelled duty increases on beer, cider, spirits and wine.
Housing and Property
- Stamp duty changes applied from today for everyone to increase nil-rate band to £250,000 - double the previous level. Use our stamp duty caculator to see the new tax changes.
- First-time buyers also get an increased threshold meaning they can now have a nil-rate band of £425,000 (previously £300,000). The limit at which the relief is removed is also increased to £625,000 from the previous £500,000. This means even a first-time buyer buying a £625,000 first-time residence will benefit from the £425,000 nil-rated band.
Energy
- A £60 billion intervention by the government to freeze energy price caps at £2,500 and provide bill grants for everyone minimum of £400.
Cutting red-tape
- Bankers' bonuses cap is to be abolished in order to support city growth - an obvious target when coupled with the corporation tax cut, dividend tax cut, and removal of top rate tax band.
- Investment zones, much like the previous free-ports with reduced taxes and red-tape for development. Up to £50,000 employers NIC rebate.
- IR35 rules to be simplified by removing the reforms introduced in 2017 and 2021.
- Tourists to receive a digital VAT-free shopping incentive.
- Annual investment allowance to remain at £1m rather than being cut to £200,000 next April.