How the Mini Budget 2022 Announcement Could Affect You
On 23rd September, Chancellor of the Exchequer, Kwasi Kwarteng, announced a new 'mini budget' with a range of budget proposals that will impact small businesses, sole traders, the self-employed and employers.
This so-called 'mini budget' would go on to have a significant impact...
Its effects will cover everything from National Insurance and personal income tax to Corporation Tax for limited companies.
Stamp Duty & Alcohol Duty
Those in the hospitality industry have welcomed the budget proposal to freeze alcohol duty from February 2023. This will equate to 7p on a pint of beer, 4p on cider, 38p on a bottle of wine and £1.35p for a bottle of spirits.
For those purchasing a home, no stamp duty will be paid on the first £250,000 of the property's price. This move is a significant rise from the previous threshold of £125,000.
For eligible first-time buyers, no stamp duty will need to be paid on the first £425,000 (a rise from the £300,000 threshold pre-budget).
Prior to the mini-budget, claiming relief as a first-time buyer was only possible if the property's value was less than £500,000. This threshold, too, has now been raised to £625,000.
The Introduction of UK Investment Zones
The introduction of UK Investment Zones is expected to come with a range of incentives and tax allowances over a ten-year period to stimulate growth in focused areas of the country.
These incentives include:
- 100% relief on business rates
- Enhanced capital allowances
- Stamp Duty Land Tax relief for commercial and residential developments
- National Insurance relief to stimulate employment in these designated zones
Changes to Tax
For those paying tax in Wales, Northern Ireland and England, the basic rate of taxation will drop from 20p to 19p in the pound from April 2023 on earnings over £12,571. There are benefits here; for basic rate taxpayers, a saving of £130 per year on average and for those paying higher tax rates, an average saving of £360.
The top rate of taxation, relevant for those with annual earnings of £150,000 and over, was planned to be scrapped from April 2023. However, ten days after the announcement of the mini-budget 2022, Mr Kwarteng announced a U-turn on this measure in response to opposition from some MPs.
What you need to do:
As a taxpayer, the new rates above will be automatically applied when you pay your tax through your employer or a tax return. However, if you are an employer, ensuring your payroll process is up to date is essential.
The Health & Social Care Levy
The temporary 1.25% increase to certain types of National Insurance, introduced in April and set to become a standalone charge going forwards, is now no longer being implemented.
- The increase of 1.25% will be reversed from November 2022; increases to the NI rate to accommodate the levy will return to their previous rate.
- The Dividend Tax increase of 1.25% affected by the NI increase will also be removed from April next year.
- The levy will not go ahead as planned in April 2023, meaning taxpayers older than the state pension age will not be affected.
Employees should note that when the NI rate is reduced in November, the primary threshold for NI will remain at £12,570.
The self-employed will start paying class 2 & 4 NI at the same point, with the Lower Profit Limit also remaining at £12,570. However, because the self-employed pay tax and NI differently, at the end of the tax year, an annualised amount of £11,908 will come into effect this year and will remain in place for the rest of the year.
Get in touch
With an unplanned budget comes uncertainty, and your new obligations and expectations may seem a little overwhelming. If you need some clarity on your obligations, Keith Graham has a team of specialists ready to advise you on any changes.
If you are self-employed, looking to invest in new premises or steer your business through uncertain and changing times, we can help. Contact us at 01252 312561 or email info@keith-graham.co.uk