The Growth Plan 2022 — key summary
Chancellor Kwasi Kwarteng announced a sweeping package of measures in his mini-budget on Friday
Kwasi Kwarteng’s first set piece as Chancellor of the Exchequer was never going to be easy, even before the 0.5% increase in interest rates the day before. The new Prime Minister Liz Truss revealed much of what we might expect before Mr Kwarteng spoke a word, so we already knew that there would be:
- a two-year £2,500 Energy Price Guarantee (EPG) for consumers;
- similar but shorter-lived support for businesses and other non-domestic energy users;
- cuts to National Insurance Contribution (NIC) rates; and
- a reversal of the planned April 2023 increases in the rate of corporation tax.
Nevertheless, Mr Kwarteng’s launch of ‘The Growth Plan’ contained some surprises, including the end of additional rate income tax (outside Scotland) and the reversal of recent changes to IR35.
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“Certainly an interesting budget when we consider that it comes in the same week as an interest rate hike to 2.25% and an announcement from the BoE that the UK is in recession. Aside from the fiscal prudence of the budget, it is a positive one on the face of it for private wealth clients and particularly those offshore to the UK. The rise in Stamp Duty thresholds will encourage investment (potentially) and will be aimed at boosting the construction and property industry at the same time.
The abolition of the salary cap for bonuses in the banking industry (irrespective of your moral views) will look to address any perceived leakage of talent post Brexit and indeed may attract more international based high earners to the UK. Finally, the removal of the additional rate of tax (45%) will be a double bonus for big earners, whilst at the same time lowering the rate of taxation upon UK trusts to 40%, something that will make a difference in considerations as to the attractiveness of UK trust structures as a planning tool.”
Jonathan Shankland, Partner, Weightmans Radcliffes Individual Services