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Mini Budget Key Points (September 2022)

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Mini Budget Key Points (September 2022)

As the UK enters recession, the newly appointed Chancellor Kwasi Kwarteng has delivered a Mini Budget with the aim to soften the blow on individuals and businesses by tackling high energy costs and inflation and encourage higher productivity.

The main points are:

·        Plans to increase Corporation tax has been cancelled. This means that the current tax rate of 19% will remain. This will keep the UK with the lowest Corporation tax rate in the G20.

·        Basic rate of income tax will be reduced from 20% to 19% with effect from April 2023. This is one year earlier than previously planned. This will affect around 30m people and they will be better off on average £170 per year.

·        The 1.25% increase in NI will be scrapped from November 2022. This will save employees on average £330 per year.

·        The increase dividend tax rates this year will return to the levels in 2021/2022 (7.5% and 32.5%). Furthermore, there will be no additional higher rate dividend tax rate of 39.35% as it will be reduced to 32.5% from April 2023.

·        IR35 rules will be simplified. This will scrap the reforms that were made in 2017 and 2021 which added complication and confusion to everyone involved.

·        AIA (Annual Investment Allowance) will remain at £1m (rather than being reduced to £200,000 in March 2023).

·        The additional rate of tax 45% will be abolished meaning that there will be a single higher rate of income tax at 40%. This will take effect from April 2023.

·        Stamp Duty will be cut as the nil band doubles to £250,000. The threshold for first time buyers is to increase from £300,000 to £425,000. The value of the property which first-time buyers can claim relief will go up from £500,000 to £625,000.

·        There will be a £400 energy price grant. In addition, the most vulnerable households will receive additional grants, taking their total savings on energy to around £2,200.

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