The chancellor Kwasi Kwarteng has claimed that he has made
the biggest tax cuts in a generation. So, what is in his mini-budget?
National Insurance
With the cost of living on the rise it is paramount that the
Government step in to help. The biggest announcement from this mini budget is
the reversal of National Insurance levy that was introduced in April 2022 by
ex-chancellor Rishi Sunak. The extra 1.25% increase was going to be used to
help fund health and social care. With the latest turnaround, the funding for health
and social care will now come from general taxation.
The reversal means an extra £330 per year for nearly 28
million people and will start from 6th November 2022. National Insurance is a tax
paid by employees, employers and the self-employed. Employees pay National
Insurance on their wages as well as income tax, employers pay extra NI
contributions for staff, and the self-employed pay National Insurance on their
profits.
Income Tax
There are also cuts in basic rate of income tax. Currently
at 20% for everyone that earns above the personal allowance, from April 2023
this will be down to 19% Government estimates 31 million people will be getting
an extra £170 a year in their pay packets.
45% higher rate of income tax abolished for England, Wales,
and Northern Ireland taxpayers and a one single higher rate of income tax of
40% from April 2023.
Corporation Tax
Companies will also benefit as the rise in corporation tax
has been cancelled. Corporation tax was due to be increased from 19% to 25% in
April 2023, however, now this will not go ahead.
Benefits
Rules around the benefit system have also been changed.
Benefits can be reduced if people don’t actively search for job commitments.
Around 120,000 more people on universal credit to be encouraged to actively
seek more work, the over 50’s to be given extra time to work with coaches to
help them in the return to work.
Shopping
Overseas visitors will also benefit as VAT-free shopping to
be introduced. This will encourage visitors to spend more while in the UK. Planned
increases in the duties on beer, cider, wine, and for spirits have also been cancelled.
Stamp Duty
Stamp duty is paid when people buy a property. No stamp duty
is paid currently on first £250,000 and for first time buyers, this is
increased to £425,000. This is currently for England, we will have to wait and
see what the Welsh Government do for us.
Energy
Energy bills was the one that worried most homeowners. There
will be a freeze on energy bills which the government claims will reduce
inflation by 5%
Total cost for the energy package to be expected around
£60bn for the 6 months from October.
Click
here to find out all the other information covered in the mini-budget.
