The mini-budget – what’s changed?
Since the mini-budget announcement on 23rd September, there have been a lot of twists and turns so, you could be forgiven for not quite keeping up.
Now in the latest chapter with the sacking of Chancellor Kwasi Kwarteng, we thought it would be a good time to summarise what’s changed since the initial announcement only a few weeks ago.
The changes
Corporation tax
Having cancelled the planned rise in Corporation Tax next year in the September mini-budget, the Prime Minister Liz Truss has just announced that the UK corporation tax will increase from 19% to 25% in April 2023 after all.
Income tax
In one of the earlier U-turns, whilst Kwasi Kwarteng was still Chancellor, it was announced that the 45% income tax cut to 40% due to happen next April would in fact remain as is at the higher rate.
The basic rate of income tax cut will now stay at 20% rather than being cut by 1p to 19%.
Energy
The average energy bills for the home are being capped at £2,500 until spring next year rather than for a year.
What’s still in place
Despite all the chaos and confusion since the mini-budget announcement on 23rd September, a lot of the areas from the original announcement remain the same. Here is a quick reminder of the key points that remain constant.
National Insurance
The recent rise of 1.25% in National Insurance (NI) in April this year will be reversed from 6 November.
This reversal will impact the planned Health and Social Care Levy to pay for the NHS – this will now be axed.
Stamp duty
The stamp duty nil rate band threshold increased for home purchases from £125,000 up to £250,000. For first-time buyers, this threshold rises to £425,000.
Annual Investment Allowance
The Annual Investment Allowance was made £1million permanently meaning businesses can benefit from 100% tax relief on their plant and machinery investments up to £1 million.
Major Infrastructure Projects
Plans to accelerate major infrastructure projects such as new roads, rail and energy infrastructure by introducing new legislation to cut restrictions so that it speeds up the planning/construction time for roads and the deployment of energy infrastructure such as offshore wind farms and streamlining environmental assessments and regulations.
Source: bbc.co.uk and What Jeremy Hunt’s statement means for you via BBC.
Our advisory services at McKenzies
So, if you’re feeling a little bewildered by all the changes over the past few weeks, don’t worry – you’re not alone! We hope this article has given you a quick overview of what to expect and how to prepare. And remember, our accountants are always here to offer advice with your Tax Planning, Financial Forecasting And Budgeting, so please do get in touch if there’s anything you need help with.