The Growth Plan 2022

The Growth Plan 2022 announced by Kwasi Kwarteng this morning went further than anticipated in terms of tax cuts and targeting a growth trend at a level the UK economy experienced in the twenty one years leading up to the 2008 financial crisis but hasn’t been seen since.

The huge spending spree is to be paid for by the sustainable growth it is expected to generate, which is also expected to lead to higher wages, greater opportunities and funding for public services.

So, what’s in the plan?

The chancellor two primary areas of focus – Stimulating Growth and Tackling Energy Prices

Growth

In order to achieve the desired 2.5% growth rate the government plans to cut taxes, streamline the public sector and “liberate” the private sector, by making Britain the best place for:

• investment
• skilled employment
• infrastructure
• home ownership, and
• enterprise

Policies:  Investment Zones

To stimulate private sector investment, the government announced a number of tax cuts as well as the creation of up to forty new Investment Zones, of which Greater Manchester Combined Authority, Cheshire West and Chester Council, Derbyshire County Council and Lancashire County Council are all names as potential sites

These investment zone areas will benefit from additional tax incentives and planning liberalisation amongst other wider support for economic growth. Specific incentives being considered include 100% business rates relief, enhanced capital allowances as well as structures and building allowance, Employer NICs relief (zero rated on earnings up to £50,270!!), and full SDLT relief!!

Other Policies aimed at increasing Private sector investment:

1. Corporation Tax to remain at 19%
2. Super Deduction rules to be reviewed and relief to continue beyond April 2023
3. SEIS (Seed Enterprise Investment Scheme) – From April 2023
   • Amount companies are able to raise lifted to £250,000
   • Gross Asset limit increased to £350,000
   • Age Limit increased to three years
   • Annual Investor limit doubled to £200,000
4. CSOP (Company Share Option Plan) – From April 2023
   • CSOP options limit doubled to £60,000
   • Access to scheme widened in line with EMI scheme rules
5. AIA (Annual Investment Allowance – immediate
   • The temporary £1 million level of the Annual Investment Allowance is to be made permanent
6. IR35 (Off payroll working rules) – From 6 April 2023
   • The changes put in place in 2017 and 2021 will be repealed!!
   • Therefore personal service companies will again be responsible for determining their own IR35 status!!
7. Bankers Bonus Cap to be removed
8. Pensions regulatory charge cap to be reformed
9. Long-term Investment for Technology & Science (LIFTS)
   • competition providing up to £500 million to support new funds designed by institutional investors and world-class
     fund managers
10. OTS (Office of Tax Simplification) to be abolished
11. Bank Corporation Tax Surcharge increase to be cancelled
12. Diverted Profits Tax increase to be cancelled
13. Alcohol duty to be frozen – from February 2023
14. VAT free shopping scheme for non-UK visitors to Great Britain
15. Minimum Service Levels to be put in place to minimise disruption caused by industrial action

Policies aimed at improving Infrastructure and increasing home ownership:

1. SDLT (Stamp Duty Land Tax) – with immediate effect
   • SDLT threshold to increase to £250,000
   • SDLT threshold for first time buyers to increase to £425,000
   • First time buyers’ relief threshold increased to £625,000
2. Planning and Infrastructure Bill – new legislation to accelerate infrastructure delivery
3. Streamlining local growth funds to increase flexibility and reduce bureaucracy and inefficiency
4. Increased incentives for public sector to sell off unused land

Policies aimed at encouraging more people into work, and helping them keep more of their money:

1. National Insurance Contribution (NIC) tax increase to be reversed from 6 November 2023
   • Increased threshold at which point NICs are paid is to remain
2. Basic Income Tax Rate to be reduced to 19% – From 6 April 2023
3. Reversal the Health and Social Care Levy – From 6 April 2023
4. Reversing the dividend tax increase – From 6 April 2023
5. Additional rate of income and dividend tax to be abolished! – From 6 April 2023
6. AET (Administrative Earnings Threshold) to be increased – From January 2023
   • To 15 hours per week for an individual and 24 per couple
7. UC (Universal Credit) sanctions regime to be strengthened
8. Expansion of DWP 50+ offer to help older workers to find work

In terms of tackling energy prices, the government has announced a number of policies over the last few days:

1. EPG (Energy Price Guarantee) – to cap the unit price for consumers for two years – From October 2022
2. Green Levies to be paid by the government for two years
3. EBRS (Energy Bill Relief Scheme) – for six months initially
   • To protect businesses and other non-domestic energy users by providing a discount on wholesale gas and electricity prices
   • To be reviewed after six months
4. EMFS (Energy Markets Financing Scheme) – to support energy firms from volatile pricing, with 100% government guaranteed emergency liquidity
5. Energy Efficiencies – From April 2023
   • Obligations on energy suppliers to help customers reduce bills to be legislated for
   • £2.1 billion in funds to be opened to support local authorities, housing associations, schools and hospitals invest in energy efficiency and renewable heating