After months of uncertainty due to rising inflation and skyrocketing energy prices, a new government has landed, and so has its ‘mini-Budget’. The now-Chancellor, Kwasi Kwarteng, has unveiled his economic plans, which he has dubbed a “new era” for the economy.
But what does this new era look like for businesses across the UK? Has the mini-Budget provided the peace of mind we needed that the challenges closest to us are being tackled in the best way? We’ve outlined the significant highlights from Mr Kwarteng’s speech to Parliament and what they mean for you and your business…
Tax cuts galore
There’s no denying that this mini-Budget was dominated by tax cuts – from Income Tax to National Insurance (NI) contributions.
Income Tax
The basic rate of Income Tax will be cut from 20% to 19% from April 2023. The additional rate of Income Tax (currently 45% and paid by those earning over £150,000) was planned to be abolished from April 2023, but the government has since U-turned on this decision.
Corporation Tax
As widely expected, Kwarteng has decided to ditch former Chancellor Rishi Sunak’s Corporation Tax hike – which would have seen a rise from 19% to 25% in the new tax year – and has instead chosen to freeze it at the current rate.
National Insurance
Rewind back to April 2022, and NI contributions increased by 1.25%. Kwasi Kwarteng has made the decision to reverse this, effective as of 6th November 2022.
Alcohol duty
One of the more beneficial announcements includes the cancellation of planned price increases for alcohol. This will be welcome news for many in the hospitality industry.
Further announcements
There were a number of other key mentions in the Chancellor’s September Budget, such as:
- New low-tax investment zones will be created in some areas of the country.
- The 2014 bankers’ bonus cap is to be scrapped, with new regulations to be set out later in a full Budget.
- A freeze on energy bills, which the government suggests will bring down inflation by 5%.
- No Stamp Duty on the first £250,000 of a property’s price and the first-time buyer tax-free threshold has been raised to properties over £425,000. This is coming into effect straight away, as of 23rd September 2022.
Is this the ideal plan of action?
Many found this mini-Budget to be somewhat lacking when it comes to supporting SMEs, particularly in industries such as hospitality, which have faced an unprecedented amount of economic turbulence over the last few years. On the whole, it would appear that the proposed economic changes offer much more relief to businesses that are already turning over significant profits.
In the run-up to the announcement, there was strong speculation that the government had been in talks with business groups across the country and was considering cutting VAT and amended business rates. The fact that this hasn’t materialised may leave some business owners thinking, well, where is the help we’ve been asking for?
Need further support and guidance?
At a time of great economic turbulence, Nabarro Poole is here to provide support where possible to organisations across the UK. We’re dedicated to working with your business to help it grow and thrive in its respective industry. Our experts are already helping a wealth of companies with budgeting, tax planning and forecasting advice, and can also offer guidance to individuals looking to start their new venture too!
To find out how we can help you, get in touch today.
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