On 23 September Chancellor Kwasi Kwarteng outlined a series of measures he believes will boost growth which has been dubbed The Growth Plan 2022.

The objective of this plan is to achieve a sustainable trend growth rate of 2.5 per cent focussing on maintaining responsible public finances, reforming the supply-side of the economy and cutting taxes to boost growth.

The chancellor says his statement will also provide the “biggest package in generations” of tax cuts to send a clear signal that economic growth is the government’s priority.

MAIN SUMMARY POINTS:
  • The additional rate 45% band for income tax will be scrapped entirely
  • The 40% higher rate will remain
  • The basic rate of income tax will be cut from April 2023 from 20% to 19%
  • The national insurance rise introduced earlier this year will be cancelled from 6 November
  • Next year’s increase in corporation tax from 19% to 25% will be cancelled – it will remain at 19%
  • The cap on bankers’ bonuses has been lifted
  • Stamp duty will be cut permanently for property buyers in England and Northern Ireland with the nil-rate band doubled to £250,000
  • Stamp duty nil-rate band for first-time buyers increased to £425,000
  • IR35 rules – which apply to contractors – will be simplified to remove “unnecessary complexity and cost” for businesses.
  • Planned increases in duty rates for beer, wine and cider will be cancelled
UNIVERSAL CREDIT RULE CHANGES

Rules around universal credit are to be tightened, reducing benefits if people don’t fulfil job search commitments. More than 100,000 people claiming universal credit will be asked to “take active steps” to increase the hours they work or find better-paid jobs.

ENERGY PRICE GUARANTEE

The energy price guarantee replaces the existing energy price cap, which sets the highest amount suppliers are allowed to charge domestic households for every unit of energy they use. Typical household energy bills are to be capped by the government at £2,500 a year from 1 October.

The government claims this freeze on energy bills will reduce inflation by 5 percentage points. The total cost for the energy package is expected to be around £60bn for the six months from October.

In addition:

  • All households will be given a one-off £400 discount on their fuel bills from October
  •  £650 will be paid to more low-income households who receive many benefits or tax credit
  • Further payments of £300 to pensioner households and £150 to disabled people will also go ahead
INVESTMENT ZONES

The Government also confirmed that it is in discussion with 38 local and mayoral combined authority areas in England including Tees Valley, South Yorkshire and West of England to set up Investment Zones in specific sites within their area.

Each Investment Zone will offer:

  • Tax cuts and liberalised planning rules are to be offered to release land for housing and commercial use
  • Investment zones offered measures such as no business rates and stamp duty waived
  • New legislation to cut planning rules and get rid of EU regulations and environmental assessments in an effort to speed up building
These will be hubs for growth, encouraging investment in new shopping centres, restaurants, apartments and offices, and creating thriving new communities.
FURTHER INFORMATION

Our mini-budget guide is below with further details. If you have any queries, please speak with your adviser.

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