New UK Chancellor of the Exchequer announces significant tax cuts

Monday, 26 September 2022
Last week (23 September 2022), newly appointed UK Chancellor of the Exchequer, the Rt Hon Kwasi Kwarteng MP presented The Growth Plan 2022 to the House of Commons. The plan contains numerous significant amendments to taxation legislation.
Big Ben

Changes to stamp duty land tax (SDLT) came into effect immediately on the announcement. The threshold above which SDLT must be paid on the purchase of residential properties in England and Northern Ireland has been increased from GBP125,000 to GBP250,000. First-time buyers’ relief will also be increased from GBP300,000 to GBP425,000. Additionally, the maximum amount that an individual can pay for a home at the same time as remaining eligible for first time buyers’ relief rose from GBP500,000 to GBP625,000

The basic rate of income tax will be cut by 1 per cent in April 2023, falling from 20 to 19 per cent. This will apply to the basic rate of non-savings, non-dividend income for taxpayers in England, Wales and Northern Ireland, the savings basic rate for all UK taxpayers and the default basic rate applying to non-savings and non-dividend income of any taxpayer that is not subject to the main or Scottish rates of income tax. The additional rate of 45 per cent for income tax will also be removed from April 2023, with current additional-rate taxpayers able to benefit from higher-rate taxpayers’ GBP500 personal savings allowance.

Charities will receive transitional relief for Gift Aid from 6 April 2023 to 5 April 2027. There will also be one-year transitional period for relief-at-source pension schemes, allowing them to continue to claim tax relief at 20 per cent.

Certain National Insurance contributions will reduce by 1.25 per cent from November 2022 and the UK-wide Health and Social Care Levy will no longer be introduced as a separate tax from April 2023. Instead, said Kwarteng, funding for health and social care services will be protected and will remain at the same level. As a result, the Health and Social Care Levy (Repeal) Bill has been introduced to parliament.

A further major change announced is the abolition of the Office of Tax Simplification (OTS). The government has said that it will embed tax simplification into the institutions of government and set a mandate for HMRC and HM Treasury to focus on simplifying the tax code.

Sources

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