Chancellor Delivers Tax Cutting Mini-Budget
When is a series of announcements about tax and spending, given by the Chancellor of the Exchequer to Parliament, not a Budget Statement?
When he says it’s not! Which is why Kwasi Kwarteng’s first major action as Chancellor is being awkwardly referred to as a ‘mini-budget’ or ‘fiscal event’.
Does it really matter what the Chancellor calls it?
Not really, but if it’s not a Budget nor part of a manifesto there are fewer guarantees that anything announced will make it into law. However, that’s a consideration for another day.
Today (23 September 2022) the new Chancellor, Kwasi Kwarteng, delivered a statement to the House of Commons on the Government’s plans to boost economic growth.
It is probably fair to say that the package he announced represents the biggest net cut in taxes in five decades.
It is also reasonable to describe it as a demonstration of one of the most contested fiscal strategies of recent times, as the Treasury is attempting to stimulate economic activity at the same time that the Bank of England is trying to combat inflation.
Monetary and fiscal policy seem at odds, ultimately only time will tell what the outcome may be.
In a statement full of metaphorical rabbits being pulled ears-first from Mr Kwarteng’s hat, there was little that could be described as ‘landlord specific’ but plenty of that will be general interest, and some items that are likely to be well received by businesses and individuals alike.
Of particular note were announcements about:
Investment Zones
The Government will work with the devolved administrations and local partners to introduce Investment Zones across the UK. Their aim is to drive growth and unlock housing. Areas with Investment Zones will benefit from tax incentives, planning liberalisation, and wider support for the local economy.
Specified sites in England will benefit from a range of time-limited tax incentives over 10 years. The tax incentives under consideration includes SDLT relief for land and buildings bought for use or development for commercial purposes, and for purchases of land or buildings for new residential development.
Personal and Business Taxation
- The Chancellor announced the reduction of National Insurance Contribution rates by 1.25 percentage points from November and that he is cancelling the Health and Social Care Levy coming in from April 2023.
- The Government will bring forward the 1 percentage point cut to the basic rate of income tax to April 2023, 12 months earlier than planned (reducing the basic rate to 19 per cent).
- The additional rate of income tax (the 45 per cent rate) will be removed from April 2023.
- The previously announced planned increase in the UK Corporation Tax rate from 19% to 25% that was due to take effect in April 2023 will not go ahead. Companies will continue to pay 19% on their taxable profits.
Housing Market
- The threshold above which Stamp Duty Land Tax (SDLT) must be paid on the purchase of residential properties in England and Northern Ireland will increase from £125,000 to £250,000 from today (23 September 2022).*
- Additionally, the Government will also increase the relief that first-time buyers can receive. The threshold at which first-time buyers begin to pay residential SDLT will increase from £300,000 to £425,000 and the maximum value of a property on which first-time buyers relief can be claimed will also increase from £500,000 to £625,000.
We expect a full Budget, or other fiscal events, will still take place before the end of the year ahead of which the NRLA will continue to make the case for the tax reforms landlords need to support thier businesses.
* As SDLT is devolved in Scotland and Wales, the Scottish and Welsh Governments will receive funding through the agreed fiscal framework to allocate as they see fit.
