The Growth Plan 2022

The Chancellor, Kwasi Kwarteng delivered his ‘mini-Budget’ on 23rd September. Focussing on tax cuts, the announcements went well beyond the tax pledges that were expected.

The Chancellor’s speech, branded as a ‘mini Budget’, included some major tax announcements and went well beyond the tax pledges made by Liz Truss in her leadership campaign. The Chancellor focused on the need to break the current cycle of a high tax burden resulting in lower returns on investment and hampering growth, with a ‘new approach needed for a new era’. Significant tax cuts were announced, including cuts to income tax, national insurance contributions and stamp duty land tax rates, as well as the cancellation of the planned corporation tax increase. Many of these cuts had been trailed and in some cases already announced, but there were far-reaching announcements that were not expected, such as the abolition of the 45% higher rate of income tax and a substantial repeal of IR35 legislation.

Following heavy criticism, the Chancellor subsequently announced, on 3^rd October, that he would not proceed with the abolition of the 45% rate of income tax for high earners.

The Chancellor also committed to a review of the tax system to make it simpler, more dynamic and fairer for families. Perhaps, counterintuitively, this includes the abolition of the Office of Tax Simplification (OTS), which is to be replaced by an internal drive by Government departments.

Although further tax announcements may come later in the year, possibly in a November, this emergency fiscal event gives a much clearer indication of the direction of travel on tax policy.

You can read more detail and our comments on these announcements in our articles below:

The Growth Plan: what do Liz Truss’s announcements mean for you?
The Chancellor’s speech set the agenda for the new Government’s tax plans. The changes announced for individuals were much more extensive than expected, and include cuts to income tax and stamp duty land tax. He has also confirmed the anticipated reversal of the recent national insurance increase.
The Growth Plan: the impact on businesses
Changes in corporation tax rates had been trailed already, but there were far-reaching tax proposals including a substantial repeal of IR 35 legislation, new investment zones, increases to the annual investment allowance and more flexibility for company share option plans.
The Growth Plan: stamp duty land tax
The starting nil rate band of stamp duty land tax (SDLT) has been doubled to cover the first £250,000 of purchase price, effective immediately, to stimulate the residential property market.
The Growth Plan: Investment Zones
The Government will introduce ‘Investment Zones’ across the UK. Areas with Investment Zones will benefit from tax incentives, planning liberalisation, and wider support for the local economy.
The Growth Plan: repeal of off-payroll working (IR35) reforms
The Government plans to repeal the changes to the off-payroll working tax rules (also known as IR35), which were introduced for public sector bodies in 2017 and for large private sector businesses in 2021.
The Growth Plan: Venture Capital Scheme changes
The limits for the Seed Enterprise Investment Schemes (SEIS) have been increased, allowing more companies to access SEIS investment, and allowing investors to invest more each year.
The Growth Plan: what is changing in personal tax?
The Chancellor’s statement included changes to rates and thresholds affecting individual taxpayers, which are much more wide-ranging than expected. The most significant changes are to national insurance, with the 1.25% increase being removed from 6 November, and to income tax, with the basic rate reducing from 20 to 19% from April 2023. The Government will also reverse the 1.25% increase to dividend tax rates from 6 April 2023.
The Growth Plan: What does it mean for Fintech?
With the ‘mini’ budget proving to be anything but, we take a look at what the Chancellor’s announcements means for fintech.