Update to the mini-budget 2022: What your letting agency needs to know
The government has reversed some measures announced in the mini-budget 2022. Here's a breakdown of what's changed, and what's still in place.
The mini-budget - presented in advance of the normal autumn review by ex-Chancellor, Kwasi Kwarteng - aimed to help promote growth during the cost of living crisis. However, some measures have since been reversed by both Prime Minister Liz Truss and the new Chancellor, Jeremy Hunt, with Truss admitting that "parts of the mini-budget went further and faster than markets were expecting."
What's changed in the mini-budget?
A planned increase to corporation tax was cancelled in the mini-budget. However, Truss has since overturned this decision and confirmed that the corporation tax increase will go ahead.
That means that, in April 2023, corporation tax will increase from 19% to 25% - raising £18 billion a year and representing a "down payment" on the full medium-term fiscal plan, affecting landlords that operate as a company.
Hunt has also shared that the government will no longer cut income tax to 19%, or 19p on the pound, in April 2023. Income tax will therefore remain at 20%, until "economic circumstances" allow otherwise.
Kwarteng also originally said that the highest rate of income tax at 45% for earnings over £150,000 would be abolished. However, he has since reversed this decision.
What measures from the mini-budget are still in place?
A stamp duty cut
Hunt confirmed that a permanent cut to stamp duty thresholds, effective from 23 September 2022, will go ahead, as this had already started parliamentary legislation.
The cut raises the threshold of the price of a property before stamp duty is paid from £125,000 to £250,000. First time buyers currently only start to pay stamp duty above £300,000, and this limit will jump to £425,000.
This will "increase the value of the property on which first-time buyers can claim relief, from £500,000 to £625,000." Overall, an additional 200,000 people will not pay stamp duty on their housing purchases.
Measures to increase housing supply
The government will increase sales of surplus government land to build new homes. On top of this, it plans to streamline the planning system and its processes, bringing forward a new bill to "unpick" the EU laws that "constrain growth".
In Investment Zones, in areas such as the West Midlands, the Tees Valley and Somerset, investors purchasing land and buildings for new residential development will pay no stamp duty. If a business hires a new employee on the tax site, the employer will also pay no national insurance.
“Cuts to stamp duty will get the housing market moving and support first-time buyers to put down roots," says Kwarteng. "New Investment Zones will bring business investment and release land for new homes in communities across the country."
National Insurance contributions increase scrapped
National Insurance payments were increased in April 2022 by 1.25%. This would have been reversed in April 2023, replaced by a health and Social Care Levy. It will now be reversed earlier than planned, on 6 November 2022, and the levy will be cancelled.
This is expected to save individuals an extra £330 on average next year, while 920,000 businesses will save £10,000 on average in 2023, including estate and letting agents.
Energy price support
The ex-Chancellor reiterated the previously announced support during the cost of living crisis, including the price cap guarantee for consumers, limiting the unit price that consumers pay for electricity and gas at £2,500, on top of the £400 payment to all households and additional payments to vulnerable households.
The Treasury will then review these measures to see how the government can continue to support households with a new approach, that will "cost the tax payer less than planned", says Hunt.
The Energy Bill Relief Scheme also includes additional support for businesses, equivalent to the price guarantee provided to households.
This article is intended as a guide only and does not constitute legal advice. You can find more information at gov.uk.