The UK Government’s Growth Plan

The UK Chancellor, Kwasi Kwarteng, has announced a series of “growth” measures that the UK government believes will help businesses and households get through this winter and beyond:-

• The 1.25% percentage point rise in National Insurance contributions will be reversed from 6 November 2022 and the government will not go ahead with the planned April 2023 levy to fund health and social care.

• The planned increase in corporation tax from 1 April 2023 will not happen and it will remain at 19%, irrespective of the level of company profits.

• A cut in the basic rate of income tax for savings income from 20% to 19% from 6 April 2023.

• For taxpayers with annual income above £150,000, abolishment of the additional rate of income tax on savings and dividends income (currently 45% and 39.35% respectively), also from April 2023.

• Note – In relation to income tax cuts for general income seen across other UK jurisdictions, the Scottish Government is expected to have more than £460 million of additional funding to allocate as it sees fit. A Scottish Budget Review is expected within the next fortnight and will contain more detail.

• The annual investment allowance, allowing 100% tax relief on certain capital expenditure including computer equipment and vans, will remain at £1million beyond April 2023, when a reduction had been planned.

• From April 2023, workers providing services via an intermediary will once again be responsible for determining their employment status and paying the correct amount of tax and National Insurance contributions under the IR35 rules. The complex ‘off-payroll’ working rules for larger employers will be repealed.

• New ‘Investment Zones’ are to be established across England, with the Government currently in discussions with 38 local authorities. In Scotland, Wales and Northern Ireland, Investment Zones will be delivered in partnership with Devolved Administrations and local partners.

• A possible future extension to the tax-advantaged Enterprise Investment Scheme (EIS) and Venture Capital Trusts (VCT). In relation to the Seed Enterprise Investment Scheme (SEIS), there will be a widening of the criteria, allowing companies to raise £250,000 under the scheme, 66% more funding than previously.

• Enhancements to the tax advantaged Company Share Option Plan (CSOP) scheme. The maximum employee share option limit will be increased from £30,000 to £60,000 for any new options granted from 6 April 2023. There will also be increased flexibility for share options granted from 6 April 2023 due to a removal of conditions around the class of shares used.

• Modifications will be made to the Universal Credit regime, to support claimants to secure more or better paid work.

• A freeze on Alcohol Duty rates from 1 February 2023 and further details of the government’s reforms to alcohol taxation.

• VAT-free shopping for overseas visitors is to be introduced as soon as possible.

• A package of measures to help households and businesses with energy bills.

• A package of major cuts to Stamp Duty Land Tax (SDLT) was also announced.Firstly, the nil rate band will be doubled from £125,000 to £250,000.There will be additional support to first time buyers, who will now pay no SDLT up to £425,000, and increasing the value of the property on which first time buyers can claim relief, from £500,000 to £625,000. This tax cut took effect from midnight on 23 September 2022.

Note that the majority of these measures have since been reversed and Kwasi Kwarteng has resigned as Chancellor.  Please see our blog of 17 October 2022 for a summary of the current position:-