Having been promised either what was interchangeably referred to as a Fiscal Event, Mini Budget or Emergency Budget, today the Chancellor delivered the uniquely titled ‘Growth Plan 2022’. Mr Kwarteng further deviated from tradition by issuing the formal announcement in a Blue Book, rather than the traditional Red or Green.
After a six-week leadership contest, where the incoming Prime Minister focussed on tax and growth issues throughout, many of the measures announced will not have come as a surprise. Indeed, the reductions in both National Insurance and Corporation Tax were so well trailed that the only real question was when NICs would be reduced – the answer coming the day before the main event that the reduction will take effect from 6 November, although this may take time to filter through to pay packets as payroll systems are updated.
What will come as a surprise (and will particularly delight high earners) are the cuts in Income Tax rates to take effect from 6 April 2023. The reduction in the Basic Rate to 19% was trailed by Rishi Sunak in the Spring but this was anticipated to be a 2024 event. Of more potential significance is the scrapping of the ‘Additional Rate’ of Income Tax of 45% for earnings over £150,000 from the same date. Whilst always a likely ambition of a Conservative government, the timing was unexpected.
Businesses too will be pleased by many of the measures announced today. Fixing the Annual Investment Allowance for qualifying capital expenditure at £1m on a permanent basis will give greater certainty. Increases in threshold values for the Seed Enterprise Investment Scheme will help start-ups raise capital, and similar threshold increases for the Company Share Option Plan will help many businesses incentivise their staff.
All told, today’s unique event appears to have been a ‘Good News only’ announcement in respect of taxation. It remains to be seen whether more negative news will be delivered in future, more traditional announcements.