UK Mini Budget – Announced 23rd September 2022
Mini Budget has been announced by Kwasi Kwarteng, there is a lot to digest. Keep reading to stay updated on the latest.
Income tax cut will come earlier
Rishi Sunak, in his role as chancellor, wanted to reduce the basic rate of income tax by 1p in the pound before the end of the Parliament in 2024.
A cut in the basic rate of income tax will be brought forward by a year.
This is now proposed to happen in April 2023. It will benefit 31 million people with an average £170 a year reduction in tax.
However, more people have been drawn into paying higher tax bands, because the thresholds have been frozen.
Also, current chancellor; Kwasi Kwarteng has pledged to abolish the 45% additional rate of tax, paid by those who earn more than £150,000 a year, in April 2023.
That is a tax saving of nearly £3,000 a year for somebody earning £200,000 annually.
It means the 40% higher rate, for earnings of over £50,270, will be the top rate.
Scotland tax bands differ – view them here.
Stamp duty and how it affects home buying?
Stamp duty holidays are often used by governments to encourage activity in the housing market.
Home improvements, fixtures and fittings also contribute to economic growth.
In Northern Ireland & England, this property purchase tax only applies to them.
There is to be a permanent cut in stamp duty.
The threshold at which the tax falls due has been raised to £250,000 from its current £125,000 level.
Meanwhile the threshold for first-time buyers has been increased from £300,000 to £425,000.
The changes should remove 200,000 people from having to pay stamp duty.
What are the Stamp Duty Rates?
How to calculate the new stamp duty rate
- Property purchase price: £850,000.
- There is no stamp duty Tax applied to the first £250,000.
- 5% above £250,000.
- That equates to an overall rate of 3.5% of the sale price, or £30,000.
National Insurance will boost pay packets
Although announced a day in advance, the reversal of an increase in National Insurance loomed large in this mini-budget.
We will see a 1.25% rise in National Insurance cancelled on 6th November.
The Treasury said the change would save nearly 28 million people an average of £330 per year.
Will National Insurance changes leave me better off?
By taking income tax and National Insurance cuts together, someone earning £20,000 a year will save £167 a year, those earning £40,000 will save £617, someone getting £60,000 will save £969, and person on £100,000 a year will get an extra £1,469, according to accountancy firm EY.
Irish Budget – Announced 27th September 2022
Higher rate of tax expected. This would see the current standard rate band go up from €36,800 for a single person and a similar hike for married couples and civil partners. It’s also expected that tax credits will also be increased.
Tánaiste Leo Varadkar flew a Budget kite earlier this year about the possibility of a third tax rate of 30%. While this is being examined, it will not be part of the upcoming budget given that it would involve a huge system overhaul.
Increases in the bands and tax credits is said to put more take home pay in people’s pockets. The question is whether this year could see a bigger than usual hike to tax bands given the pressure from soaring inflation.
On USC, there is likely to be an increase to lower bands to ensure that those getting the new higher minimum wage rate will remain outside the top rates of tax.
In April, excise on petrol and diesel was cut by 15c and 10c. This is in place until 11th October and to be extended for several more months.
Alcohol and beer
Last year’s Budget brought another 50c on a packet of 20 cigarettes although alcohol escaped any price hike.
Social welfare budget
- weekly social welfare rates will be increased by €12 for working age recipients
- there will also be a €12 increase in weekly payments for pensioners
- the Working Family Payment threshold will increase by €40
- there will be a €2 increase in the weekly rate for a qualified child
- there will be an increase in eligibility for Fuel Allowance
- a €500 lump sum for families availing of the Working Family Payment , a €500 lump sum for carers , a €500 cost of disability payment,
- a €20 increase in the domiciliary care allowance for sick children
The coalition really wants to tackle cutting the cost of childcare.
- there will be a Free School Book Scheme for primary school pupils from autumn 2023
- over 660 additional mainstream teachers, over 1,190 SNAs and 680 special education teachers will be provided
- the National Childcare Scheme hourly subsidy is to increase from 50c to €1.40
- there will be a €500 increase in post-graduate contribution grant for eligible families
- over 4,800 additional places on craft and consortia-led apprenticeships and 4,000 places on craft apprenticeship programmes will be supported
Tourism VAT rate
The hospitality sector has been campaigning hard for the retention of the reduced 9% VAT rate which is due to end in February.
Housing Minister Darragh O’Brien has publicly said he wanted an extension on the Help to Buy scheme beyond the end of this year.
The initiative is designed to help first-time buyers fund the deposit for their homes. It’s thought any extension would see a narrowing of the scheme as it has been criticised in the past for not being sufficiently targeted.
- funding will be made available to support 8,800 new HAP tenancies and 800 RAS tenancies
- 9,100 new-build social homes, 5,500 new affordable homes for sale and rent and 6,500 new social homes will be supported
- funding to deliver 37,000 home energy upgrades
Cost of Living Budget
Government ministers have promised immediate help in this year’s Budget and the cost of living package will contain those supports. Rather than waiting until January 2023 or later, households and businesses will get this help between now and December.
What is Fuel Allowance?
Fuel Allowance is a payment to help with the cost of heating your home during the winter months.
You can get it if you are getting long-term social welfare payments (see the full list below).
Current rate is €33 every week from September until April 2023.
Only one Fuel Allowance is for each household.