Last week we saw Kwasi Kwarteng’s first Budget address, setting out the UK Government’s key policies to tackle inflation and the ever-increasing energy cost crisis. Here is a summary of what the budget means to both businesses and individuals.
Mini Budget Summary – Business
Corporation Tax
In the previous March 2021 Budget, it was announced that there would be a 6% increase in Corporate Tax, however, this has now been scrapped in a bid to attract investment.
National Insurance
The previous increase of National Insurance has also been scrapped, helping nearly one million businesses nationwide to save money.
VAT
A new digital VAT-free shopping scheme will be introduced for overseas visitors to modernise the UK system.
Energy
An Energy Bill Relief Scheme has been announced to provide a discount on wholesale gas and energy prices for all non-domestic customers whose current energy bill has been significantly increased. The scheme and discount is applied automatically to customers accounts.
Investment Zones
Local Investment Zones are being created to encourage development to help the private sector – taxes will be cut and tax reliefs will be accelerated. What’s more, there will be no stamp duty on newly occupied business premises and employers will not have to pay National Insurance on the first £50,000 a new employee in the tax site earns. The budget aims to streamline planning for roads, nuclear, renewables, hydrogen, and oil and gas.
Annual Investment Allowance
The Annual Investment Allowance (AIA) for qualifying expenditure on plant and machinery, which was originally increased to £1,000,000 in the 2018 Budget and was due to revert to £200,000 from 1 April 2023, will instead be permanently set at £1,000,000.
IR35
From April 2023, the IR35 rules introduced for the public sector in 2017 and the private sector in 2021 will be repealed, meaning that end users of contractors engaged through the contractor’s personal service company will no longer be responsible for assessing whether the contractor should be taxed as an employee by the end user.
Mini Budget Summary – Individual
Income Tax
From April 2023, there will be a single higher rate of 40% on Income Tax, meaning the additional rate level will be removed. The asic rate will be cut to 19% .
Stamp Duty Land Tax
The current Stamp Duty Land Tax is payable on the first £125,000 of a property’s value, however to encourage more people to buy properties, this will be increased to £250,000. First time buyers will only pay SDLT on property’s over £425,000.
National Insurance
The 1.25% National Insurance increase will be reversed from 6th November 2022 to benefit top earners.
Energy
The government will be holding a cap for energy bills at £2,500 for two years from 1st October 2022. This will help households to save £1,000 a year.
Alcohol Duty
The government will scrap the planned alcohol duty increase for wine, beer and spirits. As a result, this means that the price of alcohol drops slightly.
If you need business advice, help with business accounting or support on tax, get in touch with our specialised accountants at James & Uzzell today to see how we can help.