Today Chancellor Kwasi Kwarteng announced tax cuts for individuals and businesses, including a change to income tax and a permanent stamp duty cut.
This so-called ‘mini-budget’ was announced on Friday 23 September 2022 – MB has put together a round up of the new measures and what they might mean for barbershops and barbers below.
Income tax: Basic rate to be cut by one percentage point
From April 2023, the basic rate of income tax will be cut from 20% to 19%. According to the Treasury this means that 31 million people will be better off by £170 next year.
Income tax: Top 45% rate scrapped
At the same time the 45% top rate of tax, which currently applies on earnings above £150,000, will be scrapped entirely. Instead, high earners will pay the 40% tax rate on those earnings.
This also means that those who earn over £150,000 will start to benefit from a personal savings allowance of £500 – meaning they’ll be able to earn up to that amount in savings interest without it being taxed.
(Note, both of these income tax changes apply to the rates for non-savings, non-dividend income for taxpayers in England, Wales and Northern Ireland. Deputy First Minister of Scotland John Swinney said the Scottish Government would set out its plans for income tax “as part of the normal budget process”.)
Planned rise in corporation tax scrapped
The Chancellor also announced a collection of tax cuts for business, including cancelling the planned rise in corporation tax. It was planned to be increased to 25% from April 2023.
National insurance rates will be cut from November
Earlier in 2022, there was a 1.25 percentage point rise in national insurance contributions (NICs). However, this will be now be reversed on 6 November. The change will benefit almost 28 million working people.
Universal credit rules are changing for those on low incomes
From next year, more than 100,000 people who claim universal credit will be asked to “take active steps” to increase the hours they work or find better paid jobs. If they do not, they run the risk of having their benefits reduced.
Stamp duty cut permanently from today
From today, there won’t be any stamp duty on the first £250,000 of a property (this has doubled from £125,000). The Treasury says this means 200,000 more people every year will be able to buy a home without paying any Stamp Duty at all.
First-time buyers will now pay no stamp duty up to £425,000 (up from £300,000). The Government has also increased the value of the property on which first time buyers can claim relief, from £500,000 to £625,000.
The industry reaction
The National Hair & Beauty Federation (NHBF) welcomed the news of tax cuts announced by the Chancellor, Kwasi Kwarteng this morning (Friday 23 September).
However, the NHBF believes that further support is needed to ensure that businesses in the sector can grow as the Government wishes. Responding to the Government’s Growth Plan, Richard Lambert, NHBF Chief Executive said: “The Chancellor’s bold statement represents a small break in the perfect storm. The cancellation of the NICs (National Insurance Contributions) rise and cut to Corporation Tax will be welcomed by many hair and beauty businesses. However, even after these cuts and the Energy Bill Relief Scheme, salons and barbershops will still face a turbulent winter of increased costs. We urge the Government to consider adding 100% business rates relief as part of its ‘ambitious package’ of reforms later in the autumn.”