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The Govt promised a pro-business mini-Budget — and didn’t disappoint

Date: September 23, 2022

Budget’s rarely live up to the hype but having dropped enough hints that his ‘mini-Budget’ would be pro-business — that’s exactly what we got from Kwasi Kwarteng.

The Chancellor’s first official outing since being appointed in Liz Truss’s cabinet saw the tax landscape for UK businesses upended as the Government threw the kitchen sink at promoting economic growth.

What we saw was a complete u-turn on the higher tax policies of the Johnson government and there’s a lot for businesses to get their heads around. Here’s a rundown of what you need to know.

1. Corporation Tax rise scrapped

News that the planned increase in Corporation Tax for companies with higher profits has been scrapped will have brought relief to many businesses. Liz Truss’s government hopes a lower tax burden will ignite economic growth, so the rate will remain at 19% for all companies.

A small downside of this will be for those companies claiming Patent Box relief — as the credit they receive will remain as it was rather than see a large increase in savings.

2. Reductions in the Annual Investment Allowance (AIA) abandoned

The current AIA, which is set at £1million, was due to expire on 31 March 2023 and return to £200,000. This decision has been reversed, and means businesses can continue to deduct 100% of the costs of qualifying plant and machinery up to £1million in the first year.

This should make tax simpler for any business investing between £200,000 and £1million in plant and machinery, and will boost business investment.

3. More generous Capital Allowances in newly created Investment Zones

Capital Allowances have also become more generous for those firms situated in up to 40 planned Investment Zones. They will be allowed to claim relief of 100% on plant and machinery in the first year, regardless of the AIA cap.

Inside these zones, no Stamp Duty Land Tax will be paid on land purchases (100% relief), no National Insurance Contributions will apply to new employees earnings up to £50,270 per year and there will be an improved 20% Structures and Buildings Allowance relief.

4. Businesses will also benefit from 100% business rates relief on newly occupied and expanded premises.

The Government is in discussion with 38 local authorities to introduce these zones across the country with the aim of driving growth, unlocking investment and creating jobs. They’ll be designated for accelerated development, both for housing and commercial sites, with a simpler planning process.

5. Research & Development (R&D) tax relief reforms continue

The review of R&D tax reliefs is continuing under the new Chancellor, and further reforms will be announced in future Budgets.

Mr Kwarteng’s predecessor, Rishi Sunak, previously announced a number of reforms, including bringing pure mathematics research within scope of the reliefs, as well as data and cloud computing costs. The reliefs have also been refocused on the UK, with overseas expenditure no longer qualifying for R&D tax relief in some cases.

6. National Insurance Contributions

The 1.25% rise in National Insurance Contributions, which came into effect in April, is abolished from 6 November. In addition, the Health & Social Care Levy that was to be introduced in April to replace this rise has also been scrapped.

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