The announcements in the mini Budget were beyond reality and many new words have entered the language in the past couple of weeks, Kamikwase and Trussonomics among them. The Mini Budget Reversal aims to counter the loss of confidence in the markets, injections of cash by the Bank of England and resulting interest rate rises. The majority of the Budget has now been reversed from the original announcements :
- Biggest intervention in the energy market ever - consumer energy price guarantee 2 years, similar scheme for businesses and energy market finance scheme to give stability to suppliers – he described the support as comparable to that given when Covid struck - NOW REDUCED TO 6 MONTHS
- "We are at the start of a new era" - starting with infrastructure, to speed up the planning process in particular with nationally significant projects, a new list is being published today, this will probably include the Lower Thames Crossing and Shrewsbury NW Relief road - NO CHANGES ANNOUNCED
- Tax incentives to encourage growth in the economy by: reforming the supply side of economy, fiscal responsibility and tax cuts - MOST OF THE TAX INCENTIVES HAVE NOW GONE
The tax measures announced and AMENDED (in CAPS) were as follows:
- The bankers bonus cap is to be abolished to keep more financial services businesses and jobs in the UK not overseas - ONE OF THE MOST CONTENTIOUS TAX CUTS REMAINS
- Creation of 38 new investments zones across the country with tax incentives with stamp duty, plant and building investment allowances and employers NI savings - THIS IS GOING AHEAD
- Next years increase in corporation tax has been cancelled, corporation tax rates remain at 19% for all sizes of business - PREVIOUS INCREASE NOW GOING AHEAD
- The Annual Investment Allowance (AIA) limit to be retained at $1m pa, not reduced to £200k from next year - THIS WILL INCREASE AS ANNOUNCED TO ENCOURAGE COMPANIES TO INVEST
- IR35 rules to be simplified, 2017 and 2021 reforms to be repealed, meaning that once again the responsibility for deciding whether a subcontractor is truly self employed will lie with the subcontractor - CURRENT RULES REMAIN
- Alcohol duty rate increases all cancelled, and additional incentives for smaller producers - RATE INCREASE REINSTATED
- The 1.25% NI increase was confirmed to include the dividend tax and has been cancelled from 6 November - NI DROP REMAINS BUT DIVIDEND TAX WILL REMAIN AT +1.25% CURRENT RATE
- The stamp duty threshold increases from £125k to £250k and first time buyers pay stamp duty from £425k up from £300k - GOING AHEAD
- The additional 45% tax rate will be scrapped, leaving the 40% tax rate as the only higher rate of tax from April 2023 - 45% RATE NOW TO REMAIN
- From the same date the 20% basic rate of income tax will be reduced to 19% - EARLY REDUCTION NOW SCRAPPED UNTIL FURTHER NOTICE
Two of the key areas of interest to small business owners have now gone, the reduction in dividend tax and repeal of IR35. The population is looking for stability in all areas, politics, interest rates, inflation, energy prices rather than headline grabbing tax cuts and it remains to see if that will be successful or a new PM, aswell as Chancellor, will be needed. You should seek professional advice before taking any steps based on these contents. If you would like advice on the Mini Budget Reversal or other areas feel free to call. Alastair Wood, AW Accounting, Shrewsbury, Shropshire – Accountants who “speak your language”