Mini Budget 2022 Summary
Chris Broome – Chartered Financial Planner
Income tax: basic rate to be cut by one percentage point and top 45% rate scrapped
From next April, the basic rate of income tax will be cut from 20% to 19%.
At the same time, the 45% top rate of tax, which currently applies on earnings above £150,000, will be scrapped entirely – so high earners will instead pay the 40% tax rate on those earnings.
This also means that those who would have otherwise been top-rate taxpayers will start to benefit from a personal savings allowance of £500 – meaning they’ll be able to earn up to that amount in savings interest without it being taxed. Top-rate tax payers don’t currently have any personal savings allowance.
Stamp duty cut
From today, you won’t pay any stamp duty on the first £250,000 of a property (doubled from £125,000). The Treasury says this means 200,000 more people every year will be able to buy a home without paying any Stamp Duty at all.
And first-time buyers will now pay no stamp duty up to £425,000 (up from £300,000). The Government has also increased the value of the property on which first time buyers can claim relief, from £500,000 to £625,000.
National insurance rates will be cut from November
The 1.25 percentage point rise in national insurance contributions (NICs), which took effect earlier this year, will be reversed on 6 November.
Universal credit rules are changing for those on low incomes
From next year, more than 100,000 people claiming universal credit will be asked to “take active steps” to increase the hours they work or find better paid jobs – or face having their benefits reduced.
- The planned corporation tax rate increase to 25% from April 2023 has been cancelled.
- The IR35 rules, which affect many IT contractors, will be simplified, with reforms introduced in 2017 and 2021 being scrapped completely. From April, workers across the UK will be responsible for setting their employment status and ensuring they pay the appropriate amount of tax and national insurance contributions.
- The investment allowance, tax relief for businesses on plant and technology investment, due to revert back to £200,000 on 1 April 2023, will permanently remain at £1m.
The Government will encourage development and investment in 38 zones. In these zones the need for some planning applications will be minimised and where they remain necessary, they will be radically streamlined. Development sites may be co-located with or separate to tax sites, depending on what makes the most sense for the local economy.
Businesses in designated areas in investment zones will benefit from 100% business rate relief on newly occupied and expanded premises, while local authorities hosting a zone will receive 100% of the business rates growth above an agreed baseline for 25 years.
Please get in touch if you have any questions about what the Budget means for you or your financial plans.
Please note: This blog is for general information only and does not constitute advice. The information is aimed at retail clients only.