UK Mini-Budget: Part 1
On 23rd September 2022, Chancellor Kwasi Kwarteng announced a host of measures intended to boost economic growth and prevent the British economy from sinking into a deeper recession. At Cheylesmore Accountants, we’re releasing a series of short articles covering the key aspects of the so-called mini-budget ranging from the cancellation of the increase to Corporation Tax to 25% from 2023, the reversal of the 1.25% increase in National Insurance from 6 November to the changes in the stamp duty land tax intended to facilitate first-time homebuyers get on the property ladder.
This blog will cover the first of these topics which is the cancellation of the increase to the rate of Corporation Tax. Earlier this year, former Chancellor Rishi Sunak mentioned that businesses with profits exceeding £50,000 would have to cough up Corp Tax at 25% instead of the present 19%. This had the intention of enabling smaller businesses with profits underneath the threshold to retain and reinvest them to grow whilst requiring larger organisations to contribute more to repairing the exchequers coffers following the spending during 2020 and 2021 because of Covid-19. However, this rise was cancelled by Kwarteng with the aim of retaining UK’s competitiveness amongst other nations and maintaining its position as the country with the lowest rate of Corp Tax in the G20.
Related to Corp Tax, the chancellor also announced keeping the Annual Investment Allowance threshold at £1 million indefinitely instead of reverting back to the original £200,000. This encourages businesses to engage in capital expenditure and develop their capabilities by upgrading their non-current assets. This should reduce the risk of businesses operating with obsolete equipment and therefore avoid worsening the productivity problem which has beleaguered the UK since the past few years.
In the following articles, we shall divulge more into other aspects of the mini budget. Be sure to follow us on our social media handles to stay up to date on the latest in the accountancy world.
