In the face of rocketing inflation, increasing interest rates, a high cost of living and a recession, a mini-budget has been announced by the government as its new Growth Plan. It aims to tackle the high energy costs and inflation rate while providing support for households and businesses. So what changes have been announced in this new plan and how might they affect you?
Stamp duty
As a way to strengthen the housing market, stamp duty cuts have been made. The nil-rate band has now been doubled to £250,000, helping more people to become homeowners. This is expected to benefit 200,000 home-buyers each year who won’t need to pay any stamp duty when buying a property up to that price.
If you’re a first-time buyer, you can benefit even more from the new stamp duty rates. You can now buy a property worth up to £425,000 without having to pay any stamp duty. The property value at which relief is given on thresholds above this nil-rate band has been increased from £500,000 to £625,000.
Another bonus for the housing market is that surplus government land is to be utilised to build new homes. As the demand for property currently outweighs the supply, this is a good way to tackle that issue.
Universal Credit
If you receive Universal Credit, tighter measures have been introduced to encourage a move from having a low income to more work that’s better paid. For claimants earning less than the amount that would be earned by working for 15 hours at the National Living Wage, active steps have to be taken to increase those earnings. If this doesn’t happen, the benefits will be reduced. This measure is hoped to move 120,000 claimants into better-paid employment.
Corporation tax and National Insurance contributions
The planned increase in corporation tax has now been cancelled and it will remain at 19%. This is to encourage investment by businesses, enabling them to boost productivity and create new jobs. The recent increase in National Insurance contributions will also be reversed in November.
Low-tax investment zones
New low-tax investment zones are to be created in 38 areas to encourage business investment. Each zone will provide businesses with significant tax cuts and offer liberalised planning rules to allow for an increase in housing as well as commercial development.
Income tax
The Chancellor has confirmed the importance of people being able to keep more of the money they earn. With that in mind, the basic rate of income tax will be reduced to 19% from April 2023 — a year earlier than originally planned. If you’re a high earner, you’ll benefit from the second income tax reform, which is to abolish the top income tax rate of 45% for earnings of over £150,000. This will also take effect from April 2023.
Bankers’ bonuses
The cap on bankers’ bonuses is also to be lifted. This is one of the more controversial decisions revealed in the mini-budget when so many people are struggling with the current cost of living.
Energy bill package
You can benefit from the government’s energy bill package both at home and as a business owner. One of the main aims of the mini-budget is to tackle the high cost of energy bills. Prices are being capped for households under the Energy Price Guarantee as of October. The Energy Bill Relief Scheme, on the other hand, reduces energy wholesale prices for businesses.
Speak with an expert financial adviser
You can benefit from the tax cuts announced in the mini-budget as a prospective homeowner or as an investor in commercial property. Give us a call on 01322 907 000 to discuss the savings you can make and our mortgage and protection brokers – located throughout Kent, London and Edinburgh – will help you secure a competitive deal for your property finance.