The Emergency Mini-Budget
This was the first real opportunity for Liz Truss’s new government, and in particular the new Chancellor Kwasi Kwarteng, to show how they plan to handle the difficult economic situation in the UK. After the weeks of campaigning that led to her leadership victory, now is the time for Ms Truss to follow through on the pledges she made, whilst addressing the key issues around inflation, the NHS and the cost of living crisis.
The mini-budget follows the announcement earlier in the week of an energy cost support package for businesses, an interest rise by the Bank of England from 1.75% to 2.25% and a statement by Health Secretary Therese Coffey outlining her policies for the NHS for Winter 2022/23.
Pre Announcement Speculation
As is to be expected, there was plenty of speculation around what the mini-budget may contain. The theories mentioned over the last week have included:
- The reversal of the recent National Insurance increase.
- Abolition of the planned increase in Corporation Tax in April 2023.
- Removal of green levies.
- A further Stamp Duty holiday or reduction.
- Removal of caps on bankers bonuses.
- Business Rates reform.
- VAT rate cuts.
The total cost estimate for the anticipated tax costs was forecast to be around £30billion.
What was announced?
Much of the speculation proved accurate, but the level of cuts exceeded even the most generous estimates, with the package of measures billed as the most dramatic tax cuts for fifty years.
The Growth Plan set out a new approach to the economy built around three central priorities:
- reforming the supply-side of the economy
- maintaining a responsible approach to public finances
- cutting taxes to boost growth.
There were of course a range of announcements during the days leading up to the Statement. Our summary, below, includes details of the following announcements from the new Government, made in the last week:
- National Insurance Contributions
- Income Tax rate reductions
- Dividend Tax rate reductions
- Corporation Tax increase abolished
- Capital Allowances extended
- Seed Enterprise Investment Scheme changes
- Company Share Option Plan extended
- Investment Zones implemented
- Stamp Duty Changes
- IR35 repeal
- Business Energy Bill Relief Scheme
There was quite a lot to include!
(This has been updated to include the further changes announced by ex-Chancellor Kwasi Kwarteng on the 3rd October 2022 and again to include announcements by new Chancellor Jeremy Hunt on the 17th October 2022.)
As always, there is still more detail to follow around many of these announcements, so we’ll keep you up to date as this becomes available. If you have any specific questions, please get in touch.
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