Mini Budget 2022: Everything you need to know at a glance
The Chancellor Kwasi Kwarteng presented his mini Budget to the nation today. The so-called Growth Plan included a tsunami of tax cuts, a bonus for bankers and a holiday for homebuyers. We round up the key points.
Alcohol duty frozen
A planned increase to the duty charged on beer, wine and spirits is to be cancelled. Kwarteng said alcohol duty would be frozen from 1 February 2023 to provide additional support to the hospitality sector.
The move is expected to save 7p on a pint of beer, 4p on a pint of cider, 38p on a bottle of wine and £1.35 on a bottle of spirits.
Bankers’ bonus cap revoked
The bankers’ bonus cap will be withdrawn which, according to the Chancellor, will help boost the competitiveness of London as a financial centre.
The cap, which was introduced by the European Union following the financial crisis, limited remuneration of select bank staff to 100% of their fixed pay or 200% with shareholder approval.
Corporation tax rise axed
The planned rise to Corporation Tax, from 19% to 25% in April 2023, has been cancelled.
It would have seen a tiered rise for companies. For those making more than £250,000 profit, the tax was set to rise from 19% to 24%.
A rise from 19% to 25% was planned for companies making between £50,000 and £250,000, while those with profits of less than £50,000 wouldn’t see a change to the 19% currently charged.
The tax will now remain at 19% for all companies.
Dividend tax rise reversed
The government will reverse the 1.25 percentage point increase in dividend tax rates from April 2023. This will benefit 2.6 million dividend taxpayers with an average saving of £345 in 2023/24 and additional rate taxpayers will further benefit from the abolition of the additional rate of dividend tax.
This will support entrepreneurs and investors across the UK to drive economic growth.
Gift Aid relief maintained
A four-year transition period for Gift Aid relief will apply, to maintain the income tax basic rate relief at 20% until April 2027. There will also be one-year transitional period for Relief at Source (RAS) pension schemes to permit them to continue to claim tax relief at 20%, following the changes to income tax (see below).
Income tax cut
The Chancellor confirmed the basic rate of income tax will be cut to 19% while the additional rate of tax for the highest earners will be abolished next year.
IR35 reforms revoked
Changes to off-payroll working rules, known as IR35, will be overturned from April next year in a bid to simplify the tax system.
The changes come into force from 6 April 2023 and mean IR35 workers will once again be responsible for determining their employment status and paying the appropriate amount of tax and National Insurance Contributions.
Limiting strike action: Minimum Service Level
The government will introduce legislation to ensure Minimum Service Levels can be put in place for transport services, limiting the impact that industrial action can have on the public’s ability to make the journeys that are essential for day-to-day life. The government is taking action to make it easier to settle industrial disputes by ensuring meaningful employer pay offers are put to employees.
National Insurance increase overturned
The 1.25 percentage point National Insurance increase will be overturned in November. Further, the planned Health and Social Care Levy – a separate tax due to come into force in April 2023 to replace this year’s NI rise – has also been scrapped.
Pension charge cap
The government will bring forward draft regulations to remove well-designed performance fees from the occupational defined contribution pension charge cap, ensuring that savers benefit from higher potential investment returns while providing clarity for institutional investors to help unlock investment into the UK’s most innovative businesses and productive assets.
Stamp duty holiday
The government has doubled the threshold at which people start to pay stamp duty from £125,000 to £250,000, with immediate effect.
As well as permanently doubling the stamp duty nil rate band for residential properties in England and Northern Ireland, the Chancellor also increased current thresholds for first-time buyers.
The changes will cut stamp duty bills for all movers by up to £2,500, while first-time buyers will save up to £11,250 in relief.
Universal Credit sanctions strengthened
The government has moved to strengthen the Universal Credit (UC) sanctions regime. Alongside changes to the Administration Earnings Threshold (AET), the government will look to set clear work expectations – including applying for jobs, attending interviews or increasing the hours – in return for receiving UC.
Claimants who do not fulfil their job-search commitments without good reason could have their benefits reduced. These changes will apply across Great Britain. In line with usual practice, the government will work with the Northern Ireland Civil Service to determine the most suitable arrangements for Northern Ireland in due course.