Key Points:

The Chancellor, Kwasi Kwarteng, today unveiled his growth plans, tackling energy costs, backing business and helping households.

Tackling Energy Prices

To provide immediate support for households, an Energy Price Guarantee (EPG) will cap the unit price that consumers pay for electricity and gas. This will mean the average household will pay no more than £2,500 per year for a period of two years from October 2022, and is expected to save at least £1,000 a year, although savings for individual households will vary according to their energy use.

This will be in addition to the £400 support all households will receive from the Energy Bills Support Scheme (EBSS) over the coming winter

The Energy Bill Relief Scheme (EBRS) is a temporary six-month scheme in Great Britain that will protect businesses and other non-domestic energy users, including charities and public sector organisations, from rising energy bills this winter by providing a discount on wholesale gas and electricity prices.

Corporation Tax

The planned increase to 25% has been cancelled, with corporation tax rates to remain at 19%, as the government sets its sight on a 2.5% trend rate of growth.

This is welcome news for businesses, as although the headlines rates stated that the tax rate was increasing to 25%, the marginal tax rates of corporation tax was actually going to increase to 26.5%

Income Tax

The basic rate of income tax will be reduced from 20% to 19% from April 2023, which should result in 31 million people getting on average £170 more per year.

The additional rate of income tax of 45% will be abolished as from April 2023. This will also apply to the additional rates of tax on dividends and non-savings income.

National Insurance

The 1.25% National Insurance rise will be cancelled, taking effect from 6 November 2022

As a result, the planned 1.25% Health & Social Care Levy will not come into force from April 2023. This means NIC and taxation of dividends will revert back to pre April 2022 levels.

Annual Investment Allowance

The annual investment allowance threshold has been permanently set at £1m, rather than reverting to £200,000.

Off-payroll working rules (IR35)

The off-payroll working rules (also known as IR35) will be repealed from 6 April 2023. From this date, workers providing their services via an intermediary will once again be responsible for determining their employment status and paying the appropriate amount of tax and national Insurance contributions. This will free up time and money for businesses that engage contractors, that could be put towards other priorities. The reform also minimises the risk that genuinely self-employed workers are impacted by the underlying off-payroll rules.

Stamp Duty

As from 23 September 2022, the level at which people begin to pay SDLT has been doubled, from £125,000 to £250,000.

The government has also increased the level for first time buyers, from £300,000 to £425,000.

In addition, the government is allowing first time buyers to access the relief when they buy a property costing less than £625,000, rather than the current level of £500,000.

Seed enterprise Investment Scheme (SEIS)

From April 2023, companies will be able to raise up to £250,000 of SEIS investment, a two-thirds increase. To enable more companies to use SEIS, the gross asset limit will be increased to £350,000 and the age limit from 2 to 3 years. To support these increases, the annual investor limit will be doubled to £200,000.

We will update and provide further information in due course.

As ever, should you have any questions, please do not hesitate to contact us.