From a stamp duty cut to measures to increase housing supply, here are 6 things you need to know about the latest budget announcements.
The Chancellor, Kwasi Kwarteng, has presented a mini-budget in advance of the normal autumn review, with measures to help promote growth during the cost of living crisis. The measures aim to promote a "rate of growth of 2.5%", ushering in a "new approach for a new era," according to Kwarteng.
1. Stamp duty cut, effective immediately
The Chancellor announced a permanent cut to stamp duty thresholds, effective from 23 September 2022. 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.
He also announced that "increase the value of the property on which first-time buyers can claim relief, from £500,000 to £625,000." This means that, overall, an additional 200,000 people will not pay stamp duty on their housing purchases.
2. Measures to increase housing supply
The government has announced that it 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."
3. 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.
4. Corporation tax increase cancelled
The planned increase of corporation tax from 19% to 25% will be cancelled - making it the lowest rate of corporation tax in the G20.
This will be a boon to any limited company landlords, especially as reports show that this way of operating is growing in popularity due to the tax efficiencies it can offer for higher-rate taxpayers.
5. Highest rate of income tax to be abolished
The Chancellor shared that the highest rate of income tax at 45% for earnings over £150,000 will be abolished.
The government will also cut income tax to 19% - or 19p on the pound - in April 2023 - a year earlier than planned, to make the UK's tax system "one of the most competitive and progressive" in the world.
6. Energy price support
The 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 Energy Bill Relief Scheme also includes additional support for businesses, equivalent to the price guarantee provided to households.