In Friday’s mini-budget, the new Chancellor Kwasi Kwarteng unveiled a Growth Plan to release the ‘huge potential’ in the British economy by tackling high energy costs and inflation and delivering higher productivity and wages.
During the statement, he confirmed a raft of tax cuts and policy reforms including:
- Corporation tax rise cancelled, keeping it at 19%
- Basic rate of income tax cut to 19% in April 2023 – one year earlier than planned – with 31 million people getting on average £170 more per year
- Stamp Duty cuts will help people on all levels of the property market and lift 200,000 homebuyers every year out of paying the tax altogether
- The 1.25 percentage point rise in National Insurance contributions will also be reversed.
The plan set an ambitious target for 2.5% trend of growth, securing sustainable funding for public services and improving living standards for everyone.
Business leaders give us their thoughts…
Michael Blaken, Accounts Director at accountancy and law firm Optimum Professional Services:
“The Chancellor has packaged up a lot of changes that will need unpicking.
“The devil is in the detail, but some of the announcements look like good news for businesses. Cancelling the planned increase in Corporation Tax, reversing the increase in National Insurance and keeping the Annual Investment Allowance at £1m are welcome. Whether they are enough to get the economy growing again remains to be seen.
“There was some information given about the reversal of off-payroll working rules, known as IR35. We have many contractors among our clients, and it will be interesting to see if this opens the market for contractors to move away umbrella companies.
“As conveyancing lawyers, we welcome the cut to Stamp Duty Land Tax for house buyers, in particular first-time buyers. Of course, this has to be balanced by the fact that interest rates are rising, making mortgage borrowing more expensive.
“One definite positive: no increase in duties in beer, cider, wine and spirits!”
Matt Griffith, Director of Policy at Business West
“Given the new Government’s fiscal event today wasn’t termed a Budget statement it contained so many measures that will affect firms and communities across the region.
“It’s positive to see the announcement of new Investment Zones within the West of England and the broader South West which could attract jobs and growth into the region. We look forward to examining the details.
“For companies making profits the cancellation of the planned corporation tax rise due in April 2023 will be welcome, and all businesses investing in new plant and machinery will get the continued benefit of the annual investment allowance which had been due to fall.
“The biggest measure for local employers is the long-trailed cancellation of the national insurance increases, which the new Chancellor announced would be effective from 6th November.
“This cut partially offsets the backdrop of higher costs of doing business. The cost of the package overall hasn’t been published but will add significantly to the government borrowing totals.
“We await further details on the reforms announced by HM Treasury.”
Andy Chamberlain, Director of Policy at IPSE
“We are delighted that the new Chancellor agrees with what we have been saying for years – that the 2017 and 2021 reforms create unnecessary complexity for contractors and businesses. It is with huge relief that we welcome this dramatic shift in government thinking.
“As delighted as we are with the news, we remain concerned that the underlying IR35 rules will stay in place, and we hope to work with the government to make further progress on this issue in the weeks and months ahead.
“But for now, this is a watershed moment and will be a tremendous boost to thousands of contractors who have been unfairly penalised by these damaging rules.”
Tony Danker, Director-General of CBI
“This is a turning point for our economy. Like Covid, the energy crisis has meant Government has had to spend massively to protect people and businesses. That means we have no choice but to go for growth to afford it.
“Today is day one of a new UK growth approach. We must now use this opportunity to make it count and bring growth to every corner of the UK. Fifteen years of anaemic growth cannot be repeated.
“Taking action to get Britain’s economy moving again by beginning construction on transport and green infrastructure projects shows immediate delivery. Planning reform is long overdue. A simpler, smarter approach to tax can pay dividends, and firms will be keen to make the most of the investment incentives on offer.
“It’s not perfect– it’s just the beginning – but there’s plenty business can work with. The Chancellor signalled more proposals to come this Autumn and these will be vital to sustain momentum on growth.”
Peter Jones, Managing Director of HR Dept Swindon, North Wiltshire and East Cotswolds
“I welcomed the news that the Chancellor is scrapping off-payroll working rules, known as IR35. This will come into effect from April 2023 and is good news both for companies and contractors, stripping a level of bureaucracy from engaging self-employed staff. “