Chancellor Kwasi Kwarteng used the 2022 Mini Budget to announce a series of tax cuts for businesses and individuals.

The Chancellor confirmed that the 1.25% rise in national insurance contributions (NICs) that came in this year will be reversed from 6 November, while the Health and Social Care Levy has been cancelled.

The planned rise in corporation tax to 25% will be scrapped and the rate maintained at the current 19%. The basic rate of income tax will be cut to 19p in April 2023, a year ahead of schedule.

Additionally, the level at which homebuyers will start to pay Stamp Duty Land Tax (SDLT) in England and Northern Ireland has been doubled from £125,000 to £250,000. First-time homebuyers will pay no SDLT on homes worth up to £425,000, up from the previous price of £300,000.

For businesses, Investment Zones will be established across the UK that benefit from lower taxes and liberalised planning frameworks to encourage business investment.

The cap on bankers’ bonuses, which limited rewards to twice the salary level, will be axed.

The Chancellor also committed to repealing the off-payroll legislation. The IR35 reforms, which rolled into the public and private sectors in 2017 and 2021 respectively, will no longer apply from April 2023 and responsibility for determining employment status where a personal service company is used will return to the worker.

Mr Kwarteng said:

‘Growth is not as high as it needs to be, which has made it harder to pay for public services, requiring taxes to rise. This cycle of stagnation has led to the tax burden being forecast to reach the highest levels since the late 1940s.

‘We are determined to break that cycle. We need a new approach for a new era focused on growth.’

The government has abandoned its plan to abolish the 45% top rate of income tax due to the negative reaction it has received.

Chancellor Kwasi Kwarteng first announced the policy in the Mini Budget on 23 September.

He has now confirmed that it will not go ahead in a statement on the social media platform Twitter. It has not yet been confirmed whether the same reversal applies to the top rate of income tax on dividends.

In a tweet, Mr Kwarteng said:

‘From supporting British business to lowering the tax burden for the lowest paid, our Growth Plan sets out a new approach to build a more prosperous economy.

‘However, it is clear that the abolition of the 45p tax rate has become a distraction from our overriding mission to tackle the challenges facing our country.

‘As a result, I’m announcing we are not proceeding with the abolition of the 45p tax rate. We get it, and we have listened.

‘This will allow us to focus on delivering the major parts of our growth package.’

Banking trade body UK Finance has revealed that the rapid decline in the use of cash as a form of payment has eased.

A report published by UK Finance found that 40.4 billion payments were made in 2021, which marked a return to pre-pandemic levels. Cash payments accounted for 15% of all payments in the UK.

In 2021 there were 23.1 million consumers who used cash as a form of payment just once a month or not at all. At the same time, there were 1.1 million consumers who mainly used cash when doing their day-to-day shopping.

Debit cards proved to be the most popular form of payment method, making up 48% of all payments.

Adrian Buckle, Head of Research at UK Finance, said:

‘In 2021 we saw the total number of payments return to pre-pandemic levels and a return towards the long-run trends in payment method usage.

‘Contactless continued to be popular, accounting for almost a third of all payments. Cash usage fell slightly, although remained the second most commonly used payment method.’

Internet link: UK Finance website

Trade body Offshore Energies UK (OEUK) has stated that the Energy Profits Levy, also known as the ‘windfall tax’, on UK energy firms should be scrapped by 2025 or it could risk having a ‘detrimental impact’ on investment in the sector.

OEUK said that a new round of windfall taxes would ‘leave the UK facing decades of energy insecurity’ and only serve to ‘heap further costs on consumers’.

The trade body warned that imposing new taxes would ‘make the UK seem fiscally unstable and a riskier place to invest’. It said that if investment in the sector declined, then production would plummet – creating a ‘disaster’ for UK energy security.

Mike Tholen, Sustainability Director at OEUK, said:

‘The government has a duty to both protect consumers and to ensure national energy security. Labour’s proposals to hit our own producers with further taxes will discourage investment and so risk a rapid decline in UK production.

‘That would mean buying more energy from abroad, increasing the UK’s trade deficit and further risking UK energy security.

‘It comes at the worst possible time for the UK offshore sector, which is still reeling from the introduction of the windfall tax in May.’

Internet link: OEUK website

The Trades Union Congress (TUC) has called on the government to increase the National Minimum Wage (NMW) rates ‘immediately’ in order to guarantee decent living standards for families.

Research carried out by the TUC found that UK poverty levels are ‘likely to get worse’ if ministers continue to hold down pay. Additional financial support for families announced by the Treasury this year will be offset by cuts to real-terms pay and other living costs, the business group added.

The TUC has called for key workers to be given a fair pay rise to meet the costs of living; more funding for the public sector so that all outsourced workers are paid at least the real Living Wage; and a boost in Universal Credit to 80% of the Real Living Wage.

Frances O’Grady, General Secretary of the TUC, said:

‘Every worker should be able to afford a decent standard of living. But millions of low-paid workers live wage packet to wage packet, struggling to get by – and they are now being pushed to the brink by eye-watering bills and soaring prices.

‘For too long workers have been told that businesses can’t afford to pay them more. But again and again the evidence has shown that firms are still making profits and increasing jobs – we can afford higher wages.

‘And higher wages are good for the economy – more money in the pockets of working people means more spend on our high streets. 

‘It’s time to put an end to low-pay Britain. Let’s get wages rising in every corner of the country and get on the pathway to a £15 per hour minimum wage.’

Internet link: TUC website