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    The Growth Plan – an Update  

    On 14 October, as an important deadline loomed for Bank of England support of the government bond markets to expire, the government’s political turmoil ratcheted up as the fallout from the ‘fiscal event’ of 23 September claimed its first scalp.

     

    A new Chancellor

    Jeremy Hunt replaced Kwasi Kwarteng as Chancellor, making him the fourth Chancellor in as many months.

    Chris Philp, the Chief Secretary to the Treasury, was also sacked. He was replaced by Ed Argar, formerly the Paymaster General and Minister to the Cabinet Office.

     

    Corporation tax

    At a press conference (the House of Commons was not sitting), the Prime Minister announced that the planned reversal of the increase to corporation tax would not go ahead. The rise from April 2023 to a main rate of 25%, with reduced rates for companies with profits below £250,000, was legislated for in the Finance Act 2021.

    31 October remains the date when the Medium-Term Fiscal Plan will be announced. The Prime Minister said that the £18bn tax savings from the corporation tax reversal was a ‘down payment’ on this strategy. That still leaves a shortfall of about £24bn in 2026/27 stemming from September’s announcement.

    Spending, said Liz Truss, would grow ‘less rapidly than previously planned’.

     

    Timetable of reversals

    Today’s announcements were the culmination of a series of statements and retractions over the last few weeks:

    • On 26 September the previous Chancellor, Kwasi Kwarteng issued an ‘Update on Growth Plan Implementation’ revealing that his Medium-Term Fiscal Plan would be presented on 23 November, alongside a forecast from the Office for Budget Responsibility (OBR).

     

    • The planned abolition of the 45% tax rate announced in September’s ‘mini-Budget’ survived just ten days before being reversed on 3 October.

     

    • Seven days later, on 10 October, the Treasury announced that the Chancellor would bring forward the announcement of his Medium-Term Fiscal Plan from 23 November to 31 October.

     

    This last date for the calendar is one of the surviving elements of Kwasi Kwarteng’s planning which Jeremy Hunt will now take forward.

     

    The next few weeks will be very interesting for many businesses, and individuals, and upcoming announcements may cause you to rethink your short- and medium-term plans. We will be sure to keep our clients and contacts updated as further detail from the government emerges.

     

    Are you making the most of HMRC’s available reliefs and allowances?

    HMRC have recently published a list of their available reliefs and allowances – are you utilising the financial support which is available? In our latest blog we highlight the tax savings you could be making.

    Child Benefit

    Child Benefit can be claimed if you’re responsible for raising a child who is:

    • under 16
    • under 20 if they stay in approved education/training

    It is important to note that only one person can claim Child Benefit for a child. It is paid every 4 weeks, and there is no limit to how many children can be claimed for.

    However, if you (or your partner’s) individual income is over £50,000, you may be taxed on the benefit, otherwise known as the ‘High Income Child Tax Benefit Charge’. Use the Child Benefit tax calculator by clicking here to determine how you may be affected.

    Tax-free childcare

    You can claim up to £500 every 3 months (up to £2,000 a year) for each of your children to help with the costs of childcare. If your child is disabled, this increases to up to £1,000 every 3 months (up to £4,000 a year).

    Check your eligibility for tax-free childcare, including how to apply, by clicking here.

    Income tax relief for your employment expenses

    Claim income tax relief on money you’ve spent on things like work uniform and clothing, tools, business travel and business fees or subscriptions.

    Marriage Allowance

    Marriage Allowance allows you to transfer 10% (£1,260) of your personal tax allowance to your husband, wife, or civil partner if you earn less than the personal tax allowance (currently £12,570).

    Help to Save

    Help to Save is a type of savings account for those who are entitled to Working Tax Credit or are in receipt of Universal Credit. The Help to Save scheme gives a bonus of 50p for every £1 saved over 4 years.

    Child Trust Funds

    A Child Trust Fund is a long-term tax-free savings account for children born between 1 September 2002 and 2 January 2011. You can add up to £9,000 per year to an existing Child Trust Fund, and there is no tax to pay on the income or any profit it makes.

    Payment of tax in instalments (Time to Pay)

    If you are unable to pay your tax bill on time, contact HMRC as soon as possible, as you may be able to pay what you owe in instalments (sometimes called a Time to Pay arrangement), depending on your circumstances and what you can afford. Find out more by clicking here.

    Get in touch

    It is more important than ever to ensure you are making the most of your available reliefs and allowances, whilst they are still available. For a further discussion on any of the financial support mentioned above, or advice tailored to your specific circumstances, please get in touch by emailing enquiries@pmm.co.uk or by calling 01254 67931.