Although it was labelled a “mini budget” – the announcements from the Chancellor today are set to be far reaching. Here Director of KBL Accounts Kelly-Anne Byres looks at what it means for you and your business.
The Growth Plan delivered today by the new Chancellor Kwasi Kwarteng is likely to cause many of us to breathe a sigh of relief.
It was designed to release the huge potential in the British economy by tackling high energy costs and inflation and delivering higher productivity and wages. And it has certainly delivered.
So, here’s how they will affect your bank balance…
Personal taxes
In a nutshell, the 45% top rate of income tax for those earning more than £150,000 is being ditched and they will pay the higher rate of 40%.
Meanwhile, a 1p-in-the-pound cut to the basic rate of income tax promised by Rishi Sunak for 2024 will be brought forward to 2023 at a cost to the government of £5 billion a year.
Finally, there will be a four-year transition period for Gift Aid relief to maintain the basic rate relief at 20 per cent until April 2027 to support charities.
House buyers
Good news for those of you buying a home – and especially those of you who are taking the first step on the housing ladder.
The threshold for stamp duty on house purchases has been raised from £125,000 to £250,000 from tonight. And for first-time buyers it will rise from a £300,000 threshold to £425,000.
The value of the property on which first-time buyers can claim relief has been raised from £500,000 to £625,000.
Bankers’ bonuses
From benefit claimers to bankers, there really is something for everyone.
The big news here is that the cap on bankers’ bonuses has been scrapped. It was introduced under EU law in 2014 but the government believes that it limits London’s competitiveness against financial rivals such as New York and Hong Kong.
Business news
Businesses are winners here too.
The planned rise in corporation tax from 19 per cent to 25 per cent from next April has been scrapped to support business investment.
National insurance
News of this change was leaked yesterday but confirmed today.
A 1.25 percentage-point increase in national insurance contributions introduced in April to fund the health and social care will be cut from November and on top of that the health and social care levy has been scrapped.
This will mean that 28 million people will keep an extra £330 a year on average in 2023-24 and about 920,000 businesses will have a reduction their national insurance bills.
Energy bills
This is the one that affects every single one of us – and has been causing a massive amount of anxiety among clients – from a personal finance point of view as well as in terms of business.
Thanks to today’s announcements however, energy bills for households have been capped at an average of £2,500 a year for two years, a £1,000 saving at present energy prices.
Bills have also been capped for six months for businesses, charities and public sector organisations such as schools and hospitals from October.
The bottom line
Hopefully, the news today helps go a little way to easing financial pressures for our clients. However, if you are struggling to make sense of your business accounts and need our guidance, we are here to help. Just drop us a line.