The basic rate of income tax was cut to 19 per cent in April 2023—a year earlier than planned—with 31 million people getting on average £170 more per year. Stamp duty cuts will help people at all levels of the property market and lift 200,000 homebuyers every year out of paying the tax altogether.
British finance minister Kwasi Kwarteng today unveiled Growth Plan 2022 to release the economy’s huge potential by reducing high energy costs and inflation, delivering higher productivity and wages, backing business and helping households. The corporation tax has not been hiked, keeping it at 19 per cent, with an eye on a 2.5 per cent trend rate of growth.
The additional rate of tax, taking effect from April 2023, was also abolished. In its place will be a single higher rate of income tax of 40 per cent.
“New investment zones will bring business investment and release land for new homes in communities across the country. And we’re accelerating new road, rail and energy projects by removing restrictions that have slowed down progress for too long,” Kwarteng said in an official release.
“We want businesses to invest in the UK, we want the brightest and the best to work here and we want better living standards for everyone,” he said.
The government is in discussion with 38 local and mayoral combined authority areas in England, including Tees Valley, South Yorkshire and West of England, to set up investment zones in specific sites within their area.
Each such zone will offer generous, targeted and time-limited tax cuts for businesses and liberalised planning rules to release more land for housing and commercial development. These will be hubs for growth, encouraging investment in new shopping centres, restaurants, apartments and offices, and creating thriving new communities.
He set out plans to tackle to the biggest drag on growth—the high cost of energy driven by Russia’s invasion of Ukraine, which has driven up inflation.
To tackle this, the government’s Energy Price Guarantee will save the typical household £1,000 a year on their energy bill with the Energy Bill Relief Scheme halving the cost of business energy bills, reducing peak inflation by about 5 percentage points.
Major tax reforms were also announced to allow businesses to keep more of their own money, encouraging investment, boosting productivity and creating jobs.
The chancellor announced more relief for businesses by making the annual investment allowance £1 million permanently, rather than letting it return to £200,000 in March 2023. This gives cent per cent tax relief to businesses on their plant and machinery investments up to the higher £1-million limit.
First-time home buyers will now pay no stamp duty up to £425,000, and increasing the value of the property on which first time buyers can claim relief, from £500,000 to £625,000. This tax cut takes effect from midnight today.
He also announced that he will further support homebuyers by increasing the disposal of surplus government land to build new homes, increasing supply.
Plans to accelerate new roads, rail and energy infrastructure were announced. New legislation will cut barriers and restrictions, making it quicker to plan and build new roads, speeding up the deployment of energy infrastructure like offshore wind farms and streamlining environmental assessments and regulations.
New measures were also announced to help people on low incomes secure more and better paid work.
In the coming weeks, the government will set out further details of plans to speed up digital infrastructure, reform business regulation, increase housing supply, improve our immigration system, make childcare cheaper, improve farming productivity and back our financial services, the official release added.
Fibre2Fashion News Desk (DS)