The Budget 2022

The Budget

Last Friday we saw the new Chancellor, Kwasi Kwarteng, step up to the challenge of trying to steer the UK away from the edge of recession, and propel it towards economic growth. In his first Budget statement, he announced more than 30 measures designed to cut taxes, impact on high energy costs and push back against inflation.

These are some of the headline takeaways from his statement-

• Basic rate of income tax cut by 1% from 20% to 19% - it’s important to note that this is a devolved tax, so it will be up to the Scottish/Welsh tax authorities to decide whether to follow suit and make changes.
• Abolition of the 45% income tax rate – as a devolved tax, it will be up to Scotland and Wales to determine whether this change is reflected in some way.
• National insurance increase of 1.25% abolished – the increase imposed since April 2022 is to be abolished from November 2022, and previously affected dividend rates will reduce from April 2023.
• Corporation tax rate increase abolished – the planned increase in the corporation tax rate from 19% to 25% in April 2023 will no longer take place.
• Stamp duty savings introduced – from today, the SDLT threshold doubles to £250,000 (increased to £425,000 for first time buyers), but as a devolved tax, it is yet to be announced whether changes to LBTT in Scotland (or LTT in Wales) will match this.

There were a number of other tax geared areas covered, such as the repeal of the IR35 rules from April 2023 to help companies secure work, and interestingly, the closure of the Office for Tax Simplification (OTS), so that in the future Westminster can ‘embed tax simplification in to the heart of government’.

Further analysis will be needed to understand how the changes announced will impact on individuals and business owners alike, and whether the Scottish and Welsh governments will try to match or mirror the changes made to devolved taxes.

We will bring you more detailed and commentary on the 2022 Autumn Mini Budget over the next week or so, but in the meantime, if you do have any questions, please get in touch with your usual Haines Watts contact.