Chancellor Kwasi Kwarteng announced last 23 September his mini-budget or “Growth Plan,” which is considered to have implemented the biggest tax cuts in a generation. Massive cuts are applied to income tax, National Insurance, corporation tax, Universal Credit, stamp duty, and alcohol duty rate. Here are the main points:
National Insurance
Corporation Tax
In April 2023, the planned corporation tax increase of up to 25% is cancelled. The new chancellor decides it remains at 19%, cancelling Rishi Sunak’s original reform of 25%.
Universal Credit
From January 2023, universal credit is tightened for part-time employees who work more than 15 hours a week receiving the National Living Wage or minimum wage, encouraging them to regularly meet with a work coach and hunt for other jobs that pay more. Failure to do so means their benefits are reduced. This reform will apply to 120,000 and more benefit claimants. Job seekers who are over the age of 50 will be given more time with their work coaches so they can return to work.
Stamp Duty
Income Tax
From April 2023, the basic rate of income tax is cut to 1% for all taxpayers and the higher rate of income tax is cut to 5%. This means basic rate taxpayers pay 19% (formerly 20%) and higher earners pay 40% (formerly 45%). Through these tax cuts, an estimate of 31 million people from England, Wales and Northern Ireland will keep £170 a year of their income and even more. Scotland will apply different rates.
Alcohol Duty Rate
The planned increase for duty rates of wine, beer, cider, and spirits, supposedly at 45% and would have been implemented from 1 August 2023, is cancelled. The alcohol duty rate remains at 19%.
Stay updated with news on UK taxes here at Legend Financial.
References
At a glance: What’s in the mini-budget? (23 September 2022). Retrieved from BBC: https://www.bbc.com/news/business-62920969
Reversal of the Health and Social Care Levy and in-year reductions for National Insurance contributions rates. (23 September 2022). Retrieved from Gov.Uk: https://www.gov.uk/government/publications/reversal-of-the-health-and-social-care-levy-and-in-year-reductions-for-national-insurance-contributions-rates
Universal credit rules tightened for part-time workers. (23 September 2022). Retrieved from BBC: https://www.bbc.com/news/business-62989572
Universal credit rules tightened for part-time workers. (23 September 2022). Retrieved from BBC: https://www.bbc.com/news/business-62989572
Stamp duty: What is it and how much do I pay? (23 September 2022). Retrieved from BBC: https://www.bbc.com/news/business-53319433
Alcohol duty: Chancellor Kwasi Kwarteng scraps planned increase. (23 September 2022). Retrieved from BBC: https://www.bbc.com/news/uk-politics-63007279
