In what was dubbed by many as a ‘Mini Budget’, Kwasi Kwarteng unveiled an unexpectedly wide range of measures with some surprises. Following on from the Prime Minister’s initial Energy Price Guarantee in early September and follow up announcement for business support measures this week, much of the media had already highlighted tax cuts to come on National Insurance, Corporation Tax and Stamp Duty. These were all confirmed in the Chancellor’s early morning speech.
What was unexpected was a further range of measures amounting to the largest package of tax cuts seen for many years which include:
• Abolishing the 45% additional tax rate in England, Wales and Northern Ireland from 2023/24.
• Bringing forward to 2023/24 the proposed cut to basic rate tax from 20% to 19%.
• Reducing dividend tax rates by 1.25% from 6 April 2023 and abolishing the additional rate of dividend tax of 39.35%.
• Reducing National Insurance rates by 1.25% from 6 November 2022.
• Increasing the nil rate band for Stamp Duty to £250,000 and increasing the first time buyer’s nil rate band to £425,000 (subject to a cap of £625,000 on the property purchase price).
• Extending the £1 million annual investment allowance indefinitely.
• Cancelling the Corporation Tax increase from 19% to 25%.
In what was only a relatively short speech, the Chancellor also announced that the controversial reforms to off-payroll working (IR35) will be rescinded and employers will no longer be responsible for categorising workers as employed or not. The ‘growth’ element in Mr Kwarteng’s ‘Growth Plan’ includes a round of infrastructure planning reforms and the development of new Investment Zones with a range of benefits to incentivise local business development. As a final surprise, planned increases on duties for wine, beer, cider and spirits have also been cancelled.