There is nothing mini about the mini budget. With the biggest tax cuts since 1972, the lowest drop of the pound against the dollar in history, there is definitely nothing mini about it.
Here are the key changes/announcements
Income tax cut
The basic rate income tax has been reduced from 20% to 19%, effective 5 April 2023; this has been brought forward a year. The previous chancellor Rushi Sunak had pledged to reduce the basic rate of tax to 19% in 2024.
The current chancellor Kwasi Kwarteng has abolished the additional rate of tax of 45% which is currently paid on income over £150,000 a year.
Income tax bands are different in Scotland, the cuts on income tax and abolishing of the additional rate of tax will not apply to Scotland.
The 1.25% national insurance increase introduced this April, will be reversed effective November 2022.
The health and social care levy will not be introduced
No stamp duty due on the first £250,000, previously £125,000.
No stamp duty on the first £425,000 for first time buyers, previously £300,000.
The cap on bankers’ bonuses has been scrapped.
The planned raise which was due to take place in April 2023 of 25% from 19% has been scrapped.
The 2017 and 2021 IR35 reforms have been scrapped. This means that the responsibility for working out whether one falls within IR35 is now back to the contractor instead of the end user. This change will be mostly welcomed by contractors and those in the industry.
- The amount companies can invest tax free in qualifying equipment, fixtures, business cars and plant and machinery (Annual investment allowance) will remain at £1m indefinitely.
- Freeze on energy bills
- The amount of funds new and start-up companies can raise has been increased from £150,000 to £250,000 under the SEIS scheme.
- The EIS (Enterprise Investment Scheme) and VCT (Venture capital trusts) both due to expire April 2025 have been extended.
It remains to be seen whether the drive for the growth of the economy will pay off.
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