IBB Wealth's Guide to the Mini-Budget 2022.

IBB Wealth's Guide to the Mini-Budget 2022.

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  MINI-BUDGET 2022 ANALYSIS OFTHE KEY TAX CHANGES AND OUTLINING THE PRACTICAL IMPLICATIONS FOR YOU, YOUR FAMILY AND BUSINESS GUIDE TO THE
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  T he Growth Plan2022 comes amid a cost-of-living crisis that has left millions of households struggling to pay their bills as fuel, food and energy prices soar. The government hopes that by cutting tax it will put more money in people’s pockets and help boost the economy. Mr Kwarteng said a major change of direction was needed to kick- full-scale Budget. The Chancellor of the Exchequer said, ‘Economic growth isn’t some academic term with no connection to the real world. It means more jobs, higher pay and more money to fund public services, like schools and the NHS. ‘This will not happen overnight but the tax cuts and reforms I’ve announced – the biggest package in generations – send a clear signal that growth is our priority. ‘Cuts to Stamp Duty Land Tax will get the housing market moving Zones will bring business investment and release land for new homes in communities across the country. And we’re accelerating new road, rail and energy projects by removing restrictions that have slowed down progress for too long. ‘We want businesses to invest in the UK, we want the brightest and the best to work here and we want better living standards for everyone.’ The Chancellor also reiterated the important principle of people keeping more of what they earn, incentivising work and enterprise. He announced a 1p cut to the basic rate of Income Tax one year earlier than planned from 6 April 2023. Alongside cutting the basic rate of Income Tax, the Chancellor also its place will be a single higher rate of Income Tax of 40%. New measures were announced to help people on low incomes secure more and better paid work. Universal Credit Claimants who earn less than the equivalent of 15 hours a week at National Living Wage will be required to meet regularly with their Work Coach and take active steps to increase their earnings or face having their The Chancellor also set out plans to tackle the biggest drag on growth – the high cost of energy driven by Vladimir Putin’s invasion of Ukraine, Price Guarantee will save the typical household £1,000 a year on their energy bill with the Energy Bill Relief Scheme halving the cost of business The majority of the Mini-Budget 2022 Growth Plan announcements are UK-wide; however the Scottish Government is expected to receive more than £600 million extra funding over the 2021 Spending Review period as a result of the changes to Income Tax and Stamp Duty Land Tax, and the Welsh Government will receive around £70 million over the same period as a result of the change to Stamp Duty Land Tax. The reversal of the Health and Social Care Levy will save 4.3 million people across Scotland, Wales and Northern Ireland more than £230 on average next year. At a later date the government will set out further details of plans to speed up digital infrastructure, reform business regulation, increase housing supply, improve our immigration system, make childcare cheaper, improve Mini-Budget 2022 Growth Plan 02 MINI-BUDGET 2022 GROWTH PLAN What the Chancellor had to say The Chancellor of the Exchequer, Kwasi Kwarteng, announced on Friday 23 September his Growth Plan 2022 to release the huge potential in the British economy by tackling high energy costs and generations and has been hailed a ‘new era’ for the UK economy. WHAT DOES THE MINI-BUDGET 2022 GROWTH PLAN MEAN FOR YOU? In our comprehensive guide to the Mini-Budget 2022 Growth Plan, we reveal the key announcements. If you have any questions or would like to discuss your situation – please contact us. MINI-BUDGET 2022 GROWTH PLAN
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  02 WELCOME What theChancellor had to say 04 AT A GLANCE Key announcements from Mini-Budget 2022 Growth Plan 05 INCOME TAX Allowing people to keep more of their money 06 CANCELLATION OF NATIONAL INSURANCE RISE AND HEALTH AND SOCIAL CARE LEVY Government is committed to a low- tax, high-growth economy 07 STAMP DUTY LAND TAX the property ladder in two ways 08 CORPORATION TAX the G7 and the lowest in the G20 09 IR35 10 INVESTMENT ZONES Driving growth and unlocking housing across the UK 03 MINI-BUDGET 2022 GROWTH PLAN Contents 04 05 06 07 08 MINI-BUDGET 2022 GROWTH PLAN 09 10
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  04 At a glance Keyannouncements from Mini-Budget 2022 Growth Plan T he Chancellor of the Exchequer, Kwasi delivered his Mini-Budget Growth Plan 2022 to Parliament. We look at the key announcements. INCOME TAX from April 2023 Currently, people in England, Wales and England, Wales and Northern Ireland taxpayers One single higher rate of Income Tax of NATIONAL INSURANCE Reverse recent rise in National Insurance Workers and employers have paid an New Health and Social Care Levy to pay CORPORATION TAX Cancel UK-wide rise in Corporation Tax, BENEFITS Rules around Universal Credit tightened steps to seek more work, or face having with work coaches to help them return WORK AND INVESTMENT Annual investment allowance – the amount companies can invest tax free – Regulations change so pensions funds can increase UK investments giving tax relief to investors from £30,000 to £60,000 STAMP DUTY LAND TAX Cut to Stamp Duty Land Tax, which is England and Northern Ireland ENERGY Total cost for the energy package BANKERS’ BONUSES scrapped out later in the autumn SHOPPING VAT-free shopping for overseas visitors cider, wine and spirits cancelled INFRASTRUCTURE AND INVESTMENT ZONES Government discussing setting up Investment Zones with 38 local areas in England and commercial use New legislation to cut planning rules, get rid of EU regulations and The Chancellor of the Exchequer, Kwasi Kwarteng, on Friday 23 September delivered his Mini-Budget Growth Plan 2022 to Parliament. We look at the key announcements. MINI-BUDGET 2022 GROWTH PLAN MINI-BUDGET 2022 GROWTH PLAN
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  05 Income Tax Allowing peopleto keep more of their money D uring the Growth Plan 2022 statement from the Chancellor of the Exchequer, Kwasi Kwarteng, of Income Tax. to next April. To allow people to keep more To incentivise enterprise and hard work and simplify the tax system, Mr Kwarteng also the additional rate of Income Tax. From 6 WHYHASTHEGOVERNMENTDONETHIS? The government, the Chancellor commented, is committed to cutting the competitive as well as an attractive place to Cutting personal tax rewards enterprise The government is also committed to simplifying the tax system, which also makes the UK more competitive. Moving to three the simpler rate structures in the OECD. Mr OECD countries had four or more central government personal Income Tax rates. The Chancellor said, ‘High tax rates damage UK competitiveness. They reduce the incentive to work, invest and BASIC RATE CUT BY 1PPT FROM 6 APRIL 2023 – FROM 20P TO 19P workers, savers and pensioners. TAXPAYERS BETTER OFF BY RATE CUT for Gift Aid relief to maintain the Income Tax will support almost 70,000 charities and is worth over £300m. applies to non-savings, non-dividend income for taxpayers in England, Wales rate which applies to savings income for taxpayers across the UK; and the default non-dividend income of any taxpayer that is Scottish rates of Income Tax. ADDITIONAL RATE (45P) OF INCOME TAX ABOLISHED The government is also removing the higher rate of Income Tax. the top national rate of Income Tax for G7 countries like the US and Italy. And it is higher than social democracies like Norway. Tax additional rate will cut tax for around 660,000 individuals from April. This will apply to the main rates which apply to non-savings, non-dividend (NSND) income for taxpayers in England, Wales and Northern Ireland; the savings rates which apply to savings income for taxpayers across the UK; and the default additional rate which applies to non-savings and non- dividend income of any taxpayer that is Scottish rates of Income Tax. removed to align with the dividend upper 6 April 2023. additional rate taxpayers will from 6 April 2023 Scottish Government (SG) (except for the PA). The Income Tax rate cuts announced during the Growth Plan 2022 statement do not apply to Scottish taxpayers. Welsh rates of Income Tax for NSND Welsh Government (on top of reduced UK rates). The Income Tax rate cuts announced therefore apply to Welsh taxpayers rather than providing additional funding for the Welsh Government. MINI-BUDGET 2022 GROWTH PLAN MINI-BUDGET 2022 GROWTH PLAN
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  06 MINI-BUDGET 2022 GROWTHPLAN Cancellation of National Insurance rise and Health and Social Care Levy Government is committed to a low-tax, high-growth economy C hancellor of the Exchequer, Kwasi Kwarteng, during his Growth Plan 2022 announcement on Friday 23 The Chancellor said, ‘The government is committed to a low-tax, high-growth economy – to make sure people keep more to have the right conditions to drive investment, growth and productivity. ‘The government is cancelling the Health and Social Care Levy – initially introduced THIS WILL BE DELIVERED IN TWO PARTS: The government will reduce National will not come into force as a separate tax from 6 April 2023 as previously planned. Mr Kwarteng commented that it means 28 million people across the UK will keep an HOW DOES CANCELLING THE HEALTH AND SOCIAL CARE LEVY HELP SPUR GROWTH? central mission is to raise living standards for all in the UK through growing the economy through the private sector. As a result of this the overall growth of the UK economy. paying NICs entirely due to the Employment At Spring Statement, on 23 March 2022, the previous government announced this technical; wholesale and retail trade; repair of motor vehicles and motorcycles; and construction. WHEN WILL PEOPLE RECEIVE THE EXTRA AMOUNT? Most employees will receive the cut in payroll. Basic rate taxpayers will on average are on average approximately £300 in Due to the complexities of some payroll 2022 or January 2023. Although individuals should contact circumstances where individuals may need to apply to HM Revenue & Customs for a refund (for example, if their employer is no longer trading, or if an individual has moved roles and their previous employer has retrospectively themselves). WILL THERE BE LESS FUNDING FOR HEALTH AND SOCIAL CARE AS A RESULT? The Levy and increased dividend tax was a year to fund health and social care. Funding for health and social care services Levy was in place. WHAT DOES THIS MEAN FOR THE SELF-EMPLOYED ? Self-employed people and company Insurance – taking into account the changes in rates throughout the year – when they WHAT IS HAPPENING TO INCOME TAX ON DIVIDENDS? From 6 April 2023, the government is to the rate of Income Tax on dividends This move is designed to support entrepreneurs and investors as we seek to raise living standards through economic growth. MINI-BUDGET 2022 GROWTH PLAN
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  07 MINI-BUDGET 2022 GROWTHPLAN Stamp Duty Land Tax T he Chancellor of the Exchequer, Kwasi Kwarteng, announced during his Growth Plan 2022 statement on Friday 23 Land Tax in England and Northern Ireland. The Chancellor reiterated the government growth and low tax, to help people keep more of the money they earn and drive To help achieve these aims, the government is reforming Stamp Duty Land This government, Mr Kwarteng commented, is also committed to helping In addition, the government is allowing These measures will reduce Stamp Duty HOW WILL THIS HELP STIMULATE GROWTH? Mr Kwarteng announced growth is this rely on the property market. This includes, decorators and others. for hard-working people and will allow them to keep more of the money they earn. This tax cut HOW IS THE GOVERNMENT HELPING FIRST-TIME BUYERS? announced the government is raising the amount they can spend on a new house without paying any Stamp Duty Land Tax. government is also increasing the maximum property purchase price that CASE STUDY 1 – FIRST-TIME BUYER IN LONDON Average London house price (Land CASE STUDY 2 – STANDARD HOME MOVER Average England House Price (Land BACKGROUND ON STAMP DUTY LAND TAX Stamp Duty Land Tax (SDLT) is a tax you pay whenever you purchase a house in England or Northern Ireland. dependingontheirpriceoncetheypassa MINI-BUDGET 2022 GROWTH PLAN The Higher Rates on Additional Dwellings apply to purchases of additional properties and are three percentage points above standard residential rates. The Non-Resident surcharge applies to purchases of residential property by non-UK residents and is two percentage points above standard residential rates. This is a permanent measure and will apply only in England and Northern Ireland. Stamp duty is not charged in Scotland; instead home purchasers pay Land and Buildings Transaction Tax, with rates set by the Scottish Government. Stamp Duty is also not charged in Wales, where purchasers pay Land Transaction Tax, with rates set by the Welsh Government. TABLE OF POTENTIAL STAMP DUTY LAND TAX SAVINGS STANDARD RESIDENTIAL SDLT RATES FROM 23 SEPTEMBER 2022 Property Value Standard Residential Rates SDLT charge for standard home mover (£) Price As at 22 As at 23 Saving (£) September 2022 September 2022 200,000 1,500 0 1,500 400,000 10,000 7,500 2,500 600,000 20,000 17,500 2,500 SDLT charge for first-time buyer (£) As at 22 As at 23 Saving September 2022 September 2022 0 0 N/A 5,000 0 5,000 20,000 8,750 11,250
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  08 U nder the previousgovernment’s plans, the rate of Corporation Tax was to increase from 19% to 25% trading companies. £50,000 and £250,000 would also face a rise in Corporation Tax, with the rate increasing incrementally from 19% to 25% depending on remaining 70% of actively trading companies, Corporation Tax was to remain at 19%. The Chancellor of the Exchequer, Kwasi Kwarteng, announced on Friday 23 September as part of his Growth Plan 2022 that the government has now cancelled this planned increase. Rather than rising to 25% from 6 April 2023, the rate will remain at 19% made. He commented that, at 19%, the UK the rest of the G7 and the lowest in the G20. HOW DOES CUTTING CORPORATION TAX HELP GROW THE ECONOMY AND RAISE LIVING STANDARDS? The Chancellor said, ‘Competitive business taxes are important to growing the economy as they can incentivise investment and enterprise. The government wants to grow the economy by creating the conditions for businesses to thrive, which will create jobs and increase investment in the UK.’ Large businesses employ over 10 million workers and the government, Mr Kwarteng commented, wants to support them to deliver the growth needed to boost living standards across the UK. The UK’s internationally competitive corporate tax system can boost business investment which drives up productivity and powers economic growth. This can result in lower prices for consumers, higher wages for employees, more jobs created as businesses grow and higher living standards in the UK. The government, the Chancellor commented, believes that robust growth is crucial to funding vital public services in the UK and keeping taxes low for working families across the UK, so that people keep more of what they earn. WHAT’S THE EVIDENCE THAT CUTTING CORPORATION TAX CAN BOOST GROWTH? The Chancellor made references to the range of academic evidence which suggests that cutting Corporation Tax can boost investment and growth by providing immediate support to businesses in the short term, and increasing business investment, productivity and growth in the medium term to long term. But the strength of this relationship can be difficult to measure and is Under the previous government’s plans, the rate of Corporation Tax was to increase from 19% to trading companies. Corporation Tax MINI-BUDGET 2022 GROWTH PLAN MINI-BUDGET 2022 GROWTH PLAN
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  09 T he Chancellor ofthe Exchequer, Kwasi Kwarteng, announced on Friday 23 September that, as part of his Growth Plan 2022, he is to repeal the changes to the IR35 rules introduced from 2017 to 2021. workers in April 2000. The rules determine whether a non-payroll worker is really a contractor or a disguised employee. In 2017, HM Revenue and Customs (HMRC) transferred responsibility for assessing whether someone was a disguised employee from the individual to the organisation. Recent reforms had moved to stop while working through an intermediary – often their own private companies. The Chancellor says workers, rather than businesses or public authorities, will once again be responsible for determining their employment status. Mr Kwarteng said, ‘To achieve a simpler system, I will start by removing unnecessary costs for business. We can also simplify the IR35 rules and we will. In practice, reforms to complexity and cost for many businesses. ‘So, as promised by the Prime Minister, we will repeal the 2017 and 2021 reforms. Of course, we will continue to keep compliance closely under review.’ The Chancellor commented the government will keep compliance under review – the rules were changed because HMRC thought 90% of contractors weren’t applying the rules correctly – so if HMRC thinks this is still the case, we may well see further changes, albeit in a different form. The change means self-employed workers providing their service through their own companies will again be responsible for paying the appropriate amount of tax and National Insurance Contributions. YOU MAY BE AFFECTED BY IR35 RULES IF YOU ARE: A worker who provides their services through their intermediary (normally their own private company) A client who receives services from a worker through their intermediary An agency providing workers’ services through their intermediary The Chancellor of the Exchequer, Kwasi Kwarteng, announced on Friday 23 September that, as part of his Growth Plan 2022, he is to repeal the changes to the IR35 rules introduced from 2017 to 2021. IR35 MINI-BUDGET 2022 GROWTH PLAN MINI-BUDGET 2022 GROWTH PLAN dependent on different macroeconomic factors, for example, economic uncertainty or regulatory environments, with different studies suggesting different levels of impact. WHAT ELSE IS BEING DONE TO DRIVE INVESTMENT AND GROWTH? The Annual Investment Allowance threshold has been permanently set at £1 million, rather than reverting to £200,000. This is a 100% capital allowance for qualifying expenditure on plant and and covers the investment needs of 99% of the UK’s businesses. To improve the ability of small British companies to raise money and attract talent to grow and succeed, the government is expanding the Seed Enterprise Investment Scheme (SEIS) to help more UK start-ups will help over 2,000 start-up companies The government is also expanding the availability and generosity of the Company Share Option Plan (CSOP) scheme. As a result, hundreds more companies are each year. Investment Zones will drive growth and unlock housing across the UK through lowering taxes and liberalising planning frameworks to encourage rapid development and business investment. ‘Competitive business taxes are important to growing the economy as they can incentivise investment and enterprise. The government wants to grow the economy by creating the conditions for businesses to thrive, which will create jobs and increase investment in the UK.’
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  10 MINI-BUDGET 2022GROWTH PLAN MINI-BUDGET 2022 GROWTH PLAN A s part of the government’s Growth Plan 2022, Chancellor of the Exchequer, Kwasi Kwarteng, announced he is in discussions with local authorities to establish Investment Zones in England. The government, the Chancellor commented, intends to work closely with the devolved administrations and local partners to deliver this opportunity to drive local growth in Scotland, Wales and Northern Ireland. Investment Zones will drive growth and unlock housing across the UK through lowering taxes and liberalising planning frameworks to encourage rapid development and business investment. WHERE WILL INVESTMENT ZONES BE LOCATED? The government is in discussions with 38 local authorities to establish Investment Zones in England and also intends to work closely with the devolved administrations and local partners to deliver this opportunity to drive local growth in Scotland, Wales and Northern Ireland. HOW WILL INVESTMENT ZONES WORK? Areas hosting Investment Zones will Lower taxes – businesses in designated sites Accelerated development – there will be designated development sites to both release more land for housing and commercial development, and to support accelerated development. The need for planning applications will be minimised and where planning applications remain necessary, they will be radically streamlined. Development sites may be co-located with, or separate to, tax sites, depending on what makes most sense for the local economy. Wider support for local growth – subject to demonstrating readiness, Mayoral Combined Authorities hosting Investment Zones will receive a single local growth settlement in the next Spending Review period. HOW WILL INVESTMENT ZONES BE SET UP? In England, the government will deliver Investment Zones in partnership with Upper Tier Local Authorities and Mayoral Combined Authorities. In Scotland, Wales and Northern Ireland, Investment Zones will be delivered in partnership with Devolved Administrations and local partners. The Secretary of State for the Department for Levelling Up, Housing and Communities Driving growth and unlocking housing across the UK As part of the government’s Growth Plan 2022, Chancellor of the Exchequer, Kwasi Kwarteng, announced he is in discussions with local authorities to establish Investment Zones in England. Investment Zones
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  11 MINI-BUDGET 2022 GROWTHPLAN MINI-BUDGET 2022 GROWTH PLAN will shortly set out the selection criteria to become an Investment Zone and the process for designating sites within it. WHO DECIDES WHERE INVESTMENT ZONES ARE LOCATED? The government has written to local leaders in every part of England to invite them to begin discussions with government to agree Investment Zone(s) in that area. The areas in The Growth Plan 2022 are the areas keen to be involved now, with more to come. The government intends to work with the devolved administrations and other local partners to deliver Investment Zones across all parts of the UK as quickly as possible. HOW WILL INVESTMENT ZONES GROW THE ECONOMY? carefully designed to encourage investment and new economic activity, supporting growth and jobs. to economic growth, and together tax and WHAT ARE THE TAX BENEFITS FROM INVESTMENT ZONES? Businesses in designated areas in Investment relief on newly occupied and expanded premises. Local authorities hosting Investment Zones will receive 100% of the business rates growth above an agreed baseline in designated sites for 25 years. In addition, businesses will receive full Stamp Duty Land Tax relief on land bought for commercial or residential development and a zero rate for Employer National Insurance contributions on new employee earnings up to £50,270 per year. To incentivise investment, there will be a relief for plant and machinery used within designated sites and accelerated Enhanced Structures and Buildings Allowance relief of 20% per year. Blackpool Council Bedford Borough Council Central Bedfordshire Council Cheshire West and Chester Council Cornwall Council Cumbria County Council Derbyshire County Council Dorset Council East Riding of Yorkshire Council Essex County Council Greater London Authority Gloucestershire County Council Greater Manchester Combined Authority Hull City Council Kent County Council Lancashire County Council Leicestershire County Council Liverpool City Region North East Lincolnshire Council North Lincolnshire Council Norfolk County Council North of Tyne Combined Authority North Yorkshire County Council Nottinghamshire County Council Plymouth City Council Somerset County Council Southampton City Council Southend-on-Sea City Council Stoke-on-Trent City Council Sunderland City Council South Yorkshire Combined Authority Tees Valley Combined Authority Warwickshire County Council West of England Combined Authority West Midlands Combined Authority West Yorkshire Combined Authority WHERE ARE THE 38 LOCAL AUTHORITIES?
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  Mini-Budget 2022: What theGrowth Plan means for your money more information. We look forward to hearing from you. The content of this Mini-Budget 2022 Growth Plan summary was produced on Friday 23 September 2022 and is for your general information and use only and is not intended to address your particular requirements. The content should not be relied upon in its entirety and shall not be deemed to be, or constitute, advice. Although endeavours have been made to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No individual or company should act upon such information without receiving appropriate professional advice after a thorough examination of their particular situation. We cannot accept responsibility for any loss as a result of acts or omissions taken in respect of the content. Thresholds, percentage rates and tax legislation may change in subsequent Finance Acts. Levels and bases of, and reliefs from, taxation are subject to change and their value depends on an individual’s personal circumstances.