It has been quite a week since the Chancellor Kwasi Kwarteng delivered his so-called Mini-Budget.
While some of the measures were broadly welcomed, they were completely overshadowed by the response to the announcement that the 45% top rate of tax would be scrapped, benefiting only those earning more than £150,000 a year.
Overall, the package of measures unveiled by the new Chancellor amounted to the biggest tax-cutting package since 1972.
Following a turbulent few days, the Government had to beat a hasty retreat, leaving the 45% rate of tax as it is to avoid it “distracting” from the wider objective of growing the UK economy.
The initial reaction of the markets to the U-turn were mildly favourable, but this was from a low base with sterling having fallen to its lowest ever level against the US dollar and bonds and equities also falling sharply in the immediate aftermath of the Mini-Budget.
By way of a reminder, the key announcements included:
Personal tax
There is to be a cut in the basic rate of tax from 20% to 19% which means a tax cut for over 31 million of us. The 45% rate of income tax remains the same following the backlash over the decision to scrap it.
Corporation Tax
The proposed increase in Corporation Tax to 25% has also been abandoned in a move to attract investment into the UK.
Energy
The Energy Bill Relief Scheme is to support all non-domestic customers, a move to mirror the Energy Price Guarantee that is available to households.
Investment Zones
New Investment Zones have been created, including Cheshire West and Chester Council, in a bid to accelerate growth in these recently identified areas.
IR35
Rules introduced in 2017 and 2021 for how contractors are engaged are to be relaxed with responsibility resting with the company which hires an individual.
Stamp Duty Land Tax
This is to be increased from £125,000 to £250,000 with first time buyers benefitting from an increase to £425,000.
Growing the economy by taking bold steps in how we are taxed is at the heart of the Government’s plans.
What is clear is that the financial landscape for us all, whether employed, self-employed or business owners is changing.
Now, more than ever, the need to take financial planning guidance is critical to ensure that our goals are achieved, our tax managed professionally and our money works as hard as it possibly can.
At Cullimore Dutton we aim to Change Lives by working with clients to support them in everything they want to achieve at every step of the journey. If you would like to speak someone from our specialist finance and estate team, please do not hesitate to contact us on 01244 729073.
