Kwasi Kwarteng has presented his first statement as the Chancellor of the Exchequer, announcing several noteworthy changes which will affect both individuals and corporates. Read on to find out what was covered in the speech.
Please note: These changes were mostly repealed on 17 October 2022. See also: New Chancellor Statement: What you need to know
The economy and fiscal forecasts
The Chancellor opted to exclude the Office for Budget Responsibility’s forecast from the mini budget, stating that the Treasury would adhere to the legally mandated two forecasts per financial year.
It has been confirmed that the OBR will instead publish an economic forecast before the end of the year.
The Chancellor began his address with the plan to tackle the cost of energy, explaining that the government intervention will be three-fold:
- Implementation of the energy price guarantee, which will limit bills for the average household to £2,500
- For businesses, a new six-month energy bill relief will be introduced. This will provide a price guarantee equivalent to the one provided for households.
- The government will announce an Energy Markets Financing Scheme which will see emergency liquidity offered to traders.
The growth plan summary
Kwarteng announced that a new approach to growth is to be adopted by the government, which aims to get the trend rate of growth up to 2.5%.
His growth plan is based on “reforming the supply side of the economy, maintaining a responsible approach to public finance and cutting taxes to boost growth”, the outline of which is below:
- Kwarteng will legislate to remove planning restrictions, which are seen to constrain growth. Further announcements on the planning system, business regulations, childcare, immigration, agricultural productivity and digital infrastructure are expected in the coming weeks.
- Kwarteng confirms the changes to benefits for part-time workers that were announced earlier in the week.
- Kwarteng will legislate to put new conditions on unions planning to strike to ensure minimum services are maintained.
- The cap on bankers' bonuses has been lifted.
- Plans to reform the pension charge cap to allow pension funds to invest more easily in UK assets were announced.
- The government is to set up ‘new investment centers’, cutting taxes for businesses in designated tax sites for 10 years.
- This includes accelerated tax relief for structures and buildings, as well as 100% tax relief on qualifying investments.
- There will also be no stamp duty to pay on the newly occupied business premises, no business rates to pay and, if a new employee is hired within the tax site, the first £50,000 they earn will be exempt from employers’ national insurance.
- Kwarteng confirms that the planned corporation tax increases have been cancelled, stating that low taxes encourage investment.
- The cut to the annual investment allowance will not go ahead as planned.
- Kwarteng is to abolish the Office of Taxation Simplification, stating that his officials will be tasked with tax simplification.
- The government plans to introduce VAT-free shopping for tourists.
- The planned duty increases on beer, cider, wine and spirits will be cancelled.
- The national insurance increase reversal announced earlier in the week has been confirmed and will take effect from the 6 November 2022.
- The 1.25 percentage point increase to the dividend tax rates will be reversed from April 2023.
- Kwarteng announced permanent cuts to stamp duty, which will be effective immediately. He raised the stamp duty threshold to £250,000 and to £425,000 for first time buyers.
- Kwarteng announced that the 1% reduction to the basic rate of tax will be brought forward by a year, meaning that the basic rate of tax will decrease to 19% from April 2023.
- The 2017 and 2021 reforms to the off payroll working rules (IR35) will be repealed from the 6 April 2023. From this date, workers providing their services via an intermediary will once again be responsible for determining their employment status.
Changes were also announced to the additional rate of tax – which have since been rescinded.
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