It is hard to keep up with the government right now, as things change on what seems like a daily basis. But with a new Chancellor, the previous mini-budget has been ripped up. We took a look at the results of the government’s economic plans.
Taxes
National Insurance: This is a tax employees, employers and the self-employed pay. It seems the chancellor has decided to retain the cut to NI. The Treasury previously said the change would save nearly 28 million people an average of £330 per year.
Income tax: Jeremy Hunt has banished the previous cut of income tax from 20p in the pound to 19p next April. This will provide extra funds for the Treasury. Or more to the point, stop more billions filtering out of the kitty.
Corporation tax: Already the government has decided to stop corporation tax from rising next April in a huge U-turn. The corporation tax rate, which is the tax companies pay on their profits, will go up from 19% to 25% in April 2023 after all.
Energy bills
A key part of the mini-budget, was the “energy price guarantee”. Under Kwarteng it was put in place for two years for households and the next six months for businesses. It limits the amount energy providers can charge customers per unit of gas or electricity.
The government says the bill for a typical dual-fuel household which pays by direct debit will be £2,500 a year. But you can still pay more – it depends on how much energy you use. Hunt though has now scrapped the two-year guarantee. The guarantee now remains for a mere six months. After that uncertainty returns, as will the fear from those struggling to get by.
Government’s Latest Economic Plans – Mortgages
Mortgage rates have been rising – and that trend has accelerated since Kwasi Kwarteng’s mini-budget. Analysts are not expecting any big moves in the economic update today to feed through immediately though.
The Bank of England’s next decision on interest rates, which guide variable rate mortgages and new fixed deals, isn’t due until 3 November, but it has suggested that it may have to raise rates even higher than previously expected.
Stamp duty
The tax that you pay when you buy a property in England and Northern Ireland was cut in the mini-budget – which was supposed to remove 200,000 people from having to pay it at all and saving many others £2,500 in charges.
