Some of the measures announced by the government include the abolition of stamp duty for new businesses, the opening of the government land for new homes and businesses and financial relief for first time buyers.
The basic income tax rate will be cut from 20% to 19% next financial year, and there will be a tougher line for those on Universal Credit in a bid to fill the large number of vacancies facing the UK workforce.
Kwasi Kwarteng also announced the abolition of corporation tax and the lifting of restrictions on bankers to “reaffirm the UK’s status as a financial services centre”.
Kwasi Kwarteng’s mini-budget announcement
The government will freeze energy prices, capped at £2,500 per household for the next two years. They will also provide households with a £400 energy rebate per household.
For businesses, including schools and pubs, the government will subsidize wholesale energy prices and create an energy market funding scheme, offering a 100% emergency liquidity guarantee for energy traders.
Taxes and inflation
As previously predicted, the rise in National Insurance benefits has now been reversed and will come into effect from 6 November 2022. The basic rate of income tax will now be 19p, with the top rate reduced to 40%.
The Office of Tax Certification is also slated to be eliminated, leaving each tax official tasked with streamlining existing systems.
The government will also aim to reduce peak inflation by 5% and achieve trend growth of 2.5% – this will be done through tax breaks and reforms for businesses to provide higher wages and fund public services.
As Kwarteng seeks to eliminate “unnecessary costs to businesses”, the chancellor has scrapped a planned rise in corporation tax and scrapped the 2017 and 2021 tax reforms, but this will be reviewed.
A planned rise in corporation tax will be scrapped – remaining at 19% rather than 20% and the lowest in the G20 – with the hope that the extra £19bn saved will be used to reinvest in wages or pension dividends.
Business and investment
The chancellor announced the creation of local investment zones, which will allow the government to free up land for new businesses and the construction of new homes.
Areas mentioned so far include the Tees Valley, Norfolk and the West of England, but a total of 40 zones are planned.
New businesses in these zones will receive 100% tax relief, as well as the first £50,000 the business no longer has to pay in State Insurance. These businesses will also benefit from no stamp duty on zoned land and no business rates.
The proposed cap on bankers would be scrapped and the annual investment cap would not drop to £200,000 but remain at £1m.
A planned rise in alcohol duties has also been scrapped, and an 18-month transitional measure will apply to wine duties and cover small casks of up to 20 liters for local breweries.
Social security and assistance:
In a bid to attract more people to the large number of jobs across the county, the chancellor said universal credit would be reduced for those not taking proactive steps to find work.
This includes finding a bigger or better job during a cost-of-living crisis.
There will be financial support for those over 50 and, possibly in light of future rail strikes, Kwarteng has announced that legislation will be put in place for union pay proposals to be voted on by members, leading to strikes being called only when if the negotiations really break down.
Good news for first-time buyers, though during the Budget the government promises to increase the allocation of public land for new homes.
Stamp duty will be reduced by £250,000 for new buyers and £425,000 for first-time buyers.
First-time buyers will also see relief from £500,000 to £625,000.
What was the reaction to the mini-budget?
“It’s all based on an outdated ideology which says that if we reward those who are already rich, the whole of society benefits,” Labour’s shadow chancellor Rachel Reeves responded in parliament after the announcement.
“As President Biden said this week, he’s tired of the economy going downhill. And he is right. It is discredited, it is inadequate, and it will not release the wave of investment that we need.”
RCN general secretary and chief executive Pat Cullen says the decision to cut the cap on bankers’ bonuses shows the government is focusing on the “wrong priorities”.
“Nursing workers will be bewildered by the decision to favor well-heeled bankers over NHS and social care workers, some of whom use food banks and live on a financial knife’s edge,” she says.
https://www.farminglife.com/news/mini-budget-2022-bankers-cap-and-corporate-tax-scrapped-in-kwasi-kwartengs-inaugural-budget-3854035 Mini-budget 2022; This was announced by the new Chancellor Kwasi Kwarteng.