After only 18 days into his job as Chancellor, with inflation sitting at 9.9 per cent and energy prices spiking, interest rates rising, a weakened pound, plus the economic recovery from COVID-19 still moving, Kwasi Kwarteng's first statement was to deliver an unenviable "mini budget" of sorts that rippled through the country.
Below are some of the key points from this announcement:
EDIT: Most of these changes have now been re-introduced thanks to a U-turn by the Government 😩
The Basic Rate of income tax will be reduced from 20% to 19% EDIT: now not happening.
The current Additional Rate of income tax, which is currently at 45% on income over £150,000 is to be scrapped entirely, leaving a ceiling income tax rate of 40% in place EDIT: now not happening.
Both initiatives are due to take place from the 2023/24 financial year and there is no planned change to the personal tax-free allowance of £12,570.
The additional 1.25% levy for health and social care, which was introduced part-way through the 2022/23 financial year, is due to be scrapped by 5th November 2022 EDIT: now not happening.
The proposed tapering of Corporation Tax from 19% to 25% on businesses with profits of over £50,000 has been scrapped and so therefore Corporation Tax will remain at 19% EDIT: now not happening and reverting back to the previous plan.
The reforms to the IR35 off-payroll working rules introduced back in 2017 and (mainly) 2021 for individual contractors working under personal service companies in the public and (relevant) private sectors, is to be completely scrapped.
The responsibility of whether a contractor should pay tax as a PAYE employee now falls back onto the contractor as was the case previous to these reforms being announced EDIT: now not happening.
In what is a permanent effective immediately measure, the tax free threshold for SDLT has been doubled from £125k to £250k (3% uplift for second property owners still applies for property values of up to £250k).
For first-time buyers, the threshold will increase from £300k to £425k on properties worth up to £625k (an increase from £500k).
AIA will remain at £1m permanently after rumours of it reducing to £200k in 2023.
The amount of funds that companies can raise through SEIS has increased from £150k to £250k. The Annual Investor Limit has also increased to £200k.
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