Johnston Carmichael responds to the ‘mini-budget’

Susie Walker

Susie Walker

Partner and Head of Tax

23 September 2022

Unexpected, dramatic, and briskly introduced, the series of tax cuts announced by the Chancellor is the biggest shake up of the UK’s finances we have ever seen without a change of government. After the challenges of Brexit, he is clearly sending a message that Britain is open for business.

“The single greatest change is the removal of the top additional rate of income tax – 45% - for the highest earners, to attract the brightest and best back to Britain. However, this measure doesn’t apply in Scotland, where income tax is devolved, and it will be interesting to see how Holyrood reacts. Will there be further divergence between North and South of the Border? And if there is, what will the impact be on our talent pipeline? Key sectors including tech are already struggling to recruit.
“Overall, there is a clear agenda of taking regulation back into the hands of the UK and positioning the country as a centre of business excellence.

More specifically, the announcements have a focus on increasing the lure of London. The removal of the cap on banker’s bonuses and the doubling of the threshold at which stamp duty is paid up to £250,000 seem calculated to attract talent back into the City where the streets have been distinctly quiet following the pandemic, and restoring the capital as an international centre of finance.

The Chancellor said he wants to get Britain building and encouraging investment in infrastructure was a central feature of his statement.

Simplifying and reducing regulation was another key theme.

Changes to enterprise investment schemes and an increase in limits for seed enterprise share options plans aim to boost investment and support entrepreneurs while the simplification of IR35 rules could grow the use of contractors again.

The introduction of VAT free shopping for overseas nationals, meanwhile, is a sign that the Truss government is keen to encourage greater tourism – and after the focus on Britain following the Queen’s death, the country has certainly been in the global spotlight. The hospitality sector will I’m sure welcome such changes.

At an annual cost of £30-40bn, Kwasi Kwarteng’s tax cuts don’t come cheap and are a significant gamble. Time will tell if he has got it right.

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