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The new UK government to cut taxes in an attempt to stimulate economy

  • Written by Katie
  • October 9, 2022
  • Business News

The new UK government to cut taxes in an attempt to stimulate economy

On 23 September 2022, Kwasi Kwarteng, the new Chancellor (the fifth in as many years) delivered a Tax Cutting “Fiscal Event” or Mini-Budget to help boost economic growth. This was in line with promises made by the new Prime Minister Liz Truss when she was campaigning to be elected as new leader of the Conservative Party.

However, many commentators are concerned that the cost of the growth measures will add significantly to Government borrowing, which will have to be paid for by tax increases in the future.

What was announced by the new UK government?

The headline announcements were:

  • The abolition of the 1.25% Health and Social Care Levy.
  • A reversal of the planned increase in corporation tax.
  • A reduction in the basic rate of income tax.
  • The abolition of the additional rates of incomes tax.

The Government’s bold strategy seeks to stimulate economic recovery and save jobs. Many European countries have introduced windfall taxes on energy companies to help fund support for energy costs. Liz Truss has however categorically rejected such a measure in the UK.

Why was that not a real budget?

The normal budget process is for the Office of Budget Responsibility (OBR) to report on the state of the UK economy at the time of the Budget and also assess the impact of the Budget proposals. As there was insufficient time for a full OBR report, the Chancellor’s statement was referred to as a “fiscal event”.

We still anticipate a ‘real’ Budget later on this Autumn.

You can find more here about the growth plan 2022.

Need more information?

How do you feel about the new UK government?

We offer a wide range of services which are unique to your business and Our team of chartered accountants have a wealth of experience in a broad range of sectors, from construction and property to the charity sector. Our team work hard to ensure they create smart and effective tax-efficient solutions for start-ups to optimise growth and help them succeed. If you want to learn more about how the team can help or simply want some start-up advice from a trusted accountant do hesitate to contact us. For more information please do hesitate to contact us on 0161 962 1855. Alternatively you can email us using the form below and we will contact you as soon as possible.

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