Insight: UK Chancellor’s Growth Plan mini-budget – September 2022

Billed as the Government’s response to soaring energy costs and inflation, Consilium Chartered Accountants Tax Partner Craig Coyle assesses the UK Chancellor’s Growth Plan ‘mini-budget’ announced today (23 September 2022).

Although the UK Government’s announcement was not a Budget, it contained more measures and content than many recent Budgets. For Scottish businesses and taxpayers, the measures can be divided into two categories:

  • Changes that are effective throughout the UK; and
  • Changes that will require a response from the Scottish Government.

How will tax changes differ in Scotland from the rest of the UK?

The most significant measures that will come into play across the UK, include the following:

  • Scrapping the proposed increase in Corporation Tax
  • Scrapping the increase in National Insurance Contributions (NIC) from 6 November 2022
  • Reducing tax rates on dividends back to pre-April 2022 levels from April 2023 (i.e. removing the 1.25% increase)
  • A permanent increase in the Annual Investment Allowance to £1m
  • An increase in the levels for Seed Enterprise Investment Scheme (SEIS)
  • The reversal of the changes to the IR35 rules introduced in recent years.

Conversely, the headline-grabbing measures which are not effective in Scotland, include:

  • Scrapping the top rate of income tax
  • A reduction in the basic rate of income tax by 1p
  • A reduction in Stamp Duty Land Tax (SDLT).

How might the Scottish Government respond to Kwarteng’s Growth Plan?

Clearly, there is a lot for the Scottish Government to digest from Chancellor Kwasi Kwarteng’s mini-budget. Arguably the most significant is that, as it stands, there will be a 6p difference in the top rate of tax between Scotland and England from April 2023 onwards.

The Consilium Tax team will keep clients appraised of the implications of this mini-budget for business owners, entrepreneurs and taxpayers shortly.

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