This is part of a wide-ranging plan containing 30 fiscal measures with the aim of reversing a "vicious circle of economic stagnation", The Growth Plan for a New Era focuses on tax cuts as well as economic reforms and enterprise zones with promised tax cuts to boost productivity and different tax regimes.
Stamp Duty Land Tax
In England and Northern Ireland, the rate at which buyers must pay the tax has increased from £125,000 to £250,000. The threshold for first-time buyers will increase to £425,000, which was previously £300,000. Plus, the value of a property on which first-time buyers can claim relief has been increased from £500,000 to £625,000.
Propertymark remains in close contact with the Scottish and Welsh Governments to understand and support changes in Land Transaction Tax in the devolved nations.
National Insurance levy
The planned National Insurance increase of 1.25%, due to come into force on 6 November, has been reversed to help employers trying to keep pace with wage growth.
The 1.25% Health and Social Care Levy will also be cancelled, which was planned as a separate tax from 6 April 2023. The Health and Social Care Levy (Repeal) Bill, legislating for the tax change, has been introduced in Parliament on 22 September 2022. The funding for health and social care will now come from general taxation.
The UK Government predicts 28 million people across the UK will keep an extra £330 a year, on average, in 2023-24. 920,000 businesses will see a cut in National Insurance bills, with 20,000 taken out of paying National Insurance entirely due to the Employment Allowance, which rose in April 2022 from £4,000 to £5,000. The Office for Budget Responsibility will not be providing an independent analysis of this mini-budget.
In particular, many small and medium businesses (SMEs) will see a cut in their National Insurance bills. In 2023, this will be worth £4,200 on average for small businesses and £21,700 for medium-sized firms that pay National Insurance. In total 905,000 micro, small and medium businesses will benefit from 2023-24.
Income Tax
There will be a £0.01p cut to the basic rate of income tax from April 2023, and the basic rate of income tax will be cut to 19% which means 31 million people will be better off by an average of £170 per year.
Alongside cutting the basic rate, the Chancellor also abolished the additional rate of tax. In its place will be a single higher rate of income tax of 40%. The policy removes the UK’s previous top rate tax, which was higher than countries like Norway, USA and Italy, and is designed to attract the best and the brightest to the UK workforce, helping businesses innovate and grow.
Corporation Tax
The planned increase in Corporation tax has also been cancelled and will remain at 19%.
Retail and hospitality
The Chancellor has also outlined sector-specific support for pubs and hospitality with a freeze on alcohol duty for another year. The reintroduction of no VAT in the retail sector for international shoppers has also been implemented.
Devolved Nations
The majority of The Chancellor's announcements are UK-wide, however, the Scottish Government is expected to receive more than £600 million in extra funding over the 2021 Spending Review period as a result of the changes to income tax and Stamp Duty Land Tax and the Welsh Government will receive around £70 million over the same period. The reversal of the Health and Social Care Levy will save 4.3 million people across Scotland, Wales and Northern Ireland more than £230 on average next year.
The rebalancing of the thresholds for which stamp duty is paid, in particular for first time buyers is long overdue to catch up with house prices which have risen at an extraordinary rate.
We did hope that stamp duty for downsizers or last time movers would have also been reviewed to release the latter part of the market, which when blocked stops movement further down for second steppers and first-time buyers, causing stagnation as buyers have nothing to move on to.
