The Growth Plan 2022… and the countdown is on

Chancellor Kwasi Kwarteng announced a series of tax cuts and measures on 23 September intended to boost economic activity. At the core of his ambitious Growth Plan were three key priorities: reforming the supply-side of the economy, maintaining a responsible approach to public finances and cutting taxes to boost growth.

Pledging a raft of changes to taxation, key personal tax announcements included:

  • A reversal of last April’s National Insurance contribution rise was confirmed by the government on 22 September. The 1.25 percentage point increase will be reversed from 6 November. The planned Health and Social Care Levy, due to replace the National Insurance rise as a new standalone tax from April 2023, has also been cancelled
  • A reduction in Stamp Duty Land Tax (SDLT) in England and Northern Ireland, raising the residential nil-rate threshold from £125,000 to £250,000, with immediate effect, and First Time Buyers Relief from £300,000 to £425,000. He also increased the maximum amount that an individual can pay for a home while remaining eligible for First Time Buyers’ Relief, from £500,000 to £625,000. As SDLT is devolved in Scotland and Wales, the Scottish and Welsh Governments will receive funding through an agreed fiscal framework to allocate as they see fit
  • A cut to the basic rate of Income Tax to 19% in April 2023 – one year earlier than previously planned. At present, people in England, Wales and Northern Ireland pay 20% on annual earnings between £12,571 and £50,270; different rates apply in Scotland. The highest rate of Income Tax (the ‘additional rate’ paid at 45% by those earning over £150,000) will be abolished. From April 2023 there will be a single higher rate of Income Tax of 40%
  • Reversing the 1.25 percentage point increase in Dividend Tax rates applying UK-wide from 6 April 2023, so the ordinary and upper rates of Dividend Tax will revert to 7.5% and 32.5% respectively.

Tax year midpoint – planning pays

At the midpoint in the 2022-23 tax year, and especially in light of the recent changes, now is an ideal time to revisit your finances, rather than leaving it late and reviewing your tax affairs in 2023. Tax planning involves taking sensible steps to reduce the amount of tax you pay. Working with us can help you put in place plans for your future to safeguard your wealth. Get in touch with any questions you may have.

Information is based on our current understanding of taxation legislation and regulations. Any levels and bases of, and reliefs from taxation, are subject to change. The Financial Conduct Authority does not regulate tax planning.