Fast, effortless and 100% online.
UK Prime Minister Liz Truss promised some bold new tax changes shortly after taking office earlier this month. The UK has been eagerly waiting for Truss and her right-hand man and newly appointed Chancellor of the Exchequer, Kwasi Kwarteng, to confront the current cost of living crisis. And the time has now come!
On Friday 23rd September 2022, the mini-budget was delivered at The Commons. If you missed it (or didn’t have a clue what was going on) we’ve broken it all down.
Here’s the good, the bad and the ugly.
The Autumn Budget is a financial statement that details the government’s planned spending and tax plans. In this two-hour long statement, the Chancellor of the Exchequer addresses any updates to Income Tax, Corporation tax, and more.
If it wasn’t already obvious, this announcement takes place every autumn – and the spring budget takes place in… you guessed it – spring!
But this isn’t the Autumn Budget. This is a mini-budget ahead of the Autumn Budget. Or, if you will, a not-a-budget budget.
Let’s get into what tax changes have been announced.
Corporations will be happy to hear that they will no longer be subject to a 6% tax increase which was proposed by former PM Boris Johnson.
The current UK government argues that slashing the Corporation Tax hike will attract companies to the UK resulting in more money being spent within the UK.
The rate will remain at 19%.
The Lib Dems criticised this move suggesting that it will do nothing but save big banks and insurers billions of pounds – yikes!
We’ll have to let you decide where this move falls – good, bad or ugly?
Did somebody say Stamp Duty cuts?
If you’re trying to get on the property ladder, now’s your chance! The government wants to boost growth by keeping the housing market flowing. First-time buyers just so happen to get caught in the mix and benefit from these cuts – sounds like a win to us!
Usually, no Stamp Duty is paid on the first £125,000 of your home. But now, no Stamp Duty needs to be paid on the first £250,000 – and for first-time buyers, the threshold is now £425,000, previously up from £300,000. Woohoo!
The value of property first-time buyers can claim relief on has also increased from £500,000 to £625,000.
Who said nothing happens overnight?
Just a few months ago, you might have noticed a bit less in your pay because of the NI increase, so it’s safe to say you might have been keeping fingers crossed for this announcement.
From November 6th, the National Insurance increase of 1.25% is being reversed.
Reversing the NI increase introduced by Rishi Sunak was a key policy in Liz Truss’ PM campaign.
With the changes, you could save:
To round it all off, the health and social care levy, announced by Johnson in September 2021, has been scrapped altogether.
Income tax rates were set to be slashed in 2024 – but Kwarteng announced that it’ll be a year earlier. From April 2023, the basic rate of Income Tax will be 19% instead of the current 20%.
Kwarteng also announced that he’s getting rid of the additional rate of Income Tax of 45%. All high-earners will pay just 40% on income over £150,000. According to him, this will allow us to simplify and empower our pro-growth tax system.
Here’s how Income Tax works with the 2022/23 rates.
In a move that has enraged Labour MP’s, the mini budget has revealed that there will no longer be a cap on bankers’ bonuses. So, what are the knock-on effects?
It was announced that this move will reaffirm the UK’s position as a financial services hub. We’re yet to see how this currently affects anyone except bankers, who can now enjoy even heftier bonuses on top of their salary.
Perhaps Truss just likes bankers?
Truss has declared she’s all about economic growth, but we’ve heard this from pretty much all prime ministers. So, what tricks exactly does Truss have up her sleeves?
In simpler terms, Liz said ✂️✂️✂️
To support business and the economy alike, VAT-free shopping will be introduced to overseas visitors. New legislation will also allow new roads, rail and energy infrastructure work without barriers.
The Annual Investment Allowance (AIA) will also remain at £1 million instead of going back to £200,000 in March 2023 as planned.
Did you know you pay a bit extra on your energy bill to help fund investment in renewables as well as environmental and social policies?
Basically, your energy bill is made up of your energy usage and a form of tax. But this tax is actually to help protect the environment by curbing pollution and emissions.
But by now, you’ve probably noticed that Truss isn’t shy to use her tax scissors – so this is also being cut.
On an individual level, here’s the toss up:
So there you have it – the good, the bad and the ugly. We’ll have to wait and see how these tax changes unfold…
Sign up for important updates, deadline reminders and basic tax hacks sent straight to your inbox.
"*" indicates required fields