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Grant Thornton Head of Tax reaction to mini-budget

Karen Campbell-Williams, Head of Tax, Grant Thornton UK LLP, said:

“Today’s announcement was the biggest tax-cutting Budget for 50 years. It was a ‘mini-budget’ with big impact and clearly marked itself as a ‘go-for-growth’ statement, with wide-spread changes across the tax system.

“Overall, the measures announced bring good news for individuals and businesses, although some sectors and those at the sharp edge of the inflationary and cost-of-living crisis will feel that not enough has been done to provide specific support.

“The announcement was in some ways more generous than expected. Bringing forward the income tax cut, to 19p, on top of the National Insurance increase reversal confirmed yesterday, will increase take-home pay for the majority of individuals in England, Wales, and Northern Ireland. It was a surprise to see the 45% higher tax rate being abolished, with the stated aim to make the UK more competitive and to simplify the tax system.

“It was a positive budget for businesses. The reversal of the planned corporation tax rise and changes to capital allowances are just some of the measures that will help free up cash for many when they need it most and stimulate further investment; investment by businesses, into businesses, and into the UK itself. The corporation tax reversal means the UK maintains the lowest rate across the G20, making it an attractive destination for overseas investors and particularly in light of the current weak pound.

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“The reversal of the recent changes to off-payroll workers (IR35) will simplify things for businesses and, crucially, open up the labour market, enabling businesses to more easily access the skills they need as the battle for talent continues. While many of the administrative and process changes made over the last few years will need to be unpicked, the lessons learned regarding employment status will be useful to ensure businesses remain compliant when continuing to engage with sole traders.

“The introduction of investment zones across the UK, with relaxed planning rules and broad tax and NI reliefs, should encourage regional growth and support business investment – a key aim of the Levelling Up agenda. In theory, businesses should find it easier and more cost-efficient to operate, but they need to be aimed at the areas that need it most.

“There was also good news for housebuilders, developers and buyers, with significant changes to Stamp Duty Land Tax. First time buyers in particular will benefit with increases to the thresholds before the tax is paid. As with the Stamp Duty holiday introduced during the pandemic, the changes will likely encourage more people onto the market. But there are still questions as to how feasible it will be for people to reach this point, with increasing interest rates and the need for purchasers to build up sizeable deposits. 

“The total package of the not so mini-Budget shared today results in a huge stimulus – one that we’ve not seen in the UK for a long time. Without accompanying forecasts and details as to how the significant changes will be funded, it remains to be seen what impact it will have and whether it will be short term gain for long term pain. Businesses from all sectors have been under workforce pressures, and the response from the labour market will be crucial.  

“Ultimately, the growth dice have been rolled. But it's too early to know if the gamble will succeed and boost confidence enough to encourage businesses and people to spend and invest, stimulating the UK economy.”

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