The expected 'emergency budget' is set to take place before the end of the month and businesses are eagerly waiting to hear further details of the support they will receive.
Chancellor Kwasi Kwarteng's 'fiscal event' is expected to take place on Friday, September 23 at 9.30am.
It follows the announcement of the Energy Relief Support Scheme announced on Wednesday - a full breakdown of the key points is here.
The six-month scheme, which requires emergency legislation to be implemented, will cover businesses from October 1 until March 31 and is designed to cut the unit price that firms pay for their gas and electricity by around half.
More details of how it will be paid for is expected in the mini Budget.
There has been criticism of the Government for not publishing the report from the The independent Office for Budget Responsibility (OBR) which normally comes alongside Budget statements.
This document sets out how much each new policy will cost, the level of tax raised and the impact of the decisions on the economy.
Here are some key points expected in the 'mini' budget:
Business rates and VAT:
Business groups have been lobbying for help beyond energy bills and have been talking with Government about changes to business rates and cuts to VAT to help them survive in the aftermath of the pandemic and the current cost-of-living crisis.
Just Eat, Marriott International, Mitchells & Butlers, Pizza Hut UK, Caffè Nero and Merlin Entertainments are among the signatories, of a letter sent by UKHospitality to Chancellor, Kwasi Kwarteng that proposes a five-point plan of action through to April 2023, with a review in early 2023:
- A 10% headline VAT rate for hospitality
- A business rates holiday for all hospitality premises, with no caps applied
- Deferral of all environmental levies
- Reinstatement of a generous HMRC Time to Pay scheme
- Reintroduction of a trade credit insurance scheme for energy
Jon Hickman - Corporate Tax Partner at BDO said that Truss may be considering a reduction in business rates for small businesses and a possible extension of the existing 50 per cent relief for retail, hospitality and leisure businesses.
A temporary reduction in the rate of VAT applied to hospitality and leisure sales may be announced.
And there is speculation that the main VAT rate could fall to 15 per cent from the current 20 per cent, he said.
It is possible that VAT will also be cut from energy bills.
Rajeev Shaunak, partner at accountancy firm MHA, said one of the top priorities should be to cut VAT on energy bills for small and medium businesses from 20 per cent to 5 per cent, bringing it in line with the consumers.
He added: “Businesses would also welcome a freeze or overhaul of business rates to help them better manage their medium-term costs and gain access to crucial government-backed credit, particularly as interest rates for mainstream capital remain at high levels and many businesses in the hospitality sector are sorely underfunded.
National Insurance
While still a leadership candidate, Liz Truss pledged to reverse a National Insurance rise that came into force in April to help fund NHS and social care.
Confirmation of that has come in a tweet by Chancellor Kwasi Kwarteng who said that it will be scrapped along with its replacement the Health and Social Care levy.
Under former Chancellor Rishi Sunak, NI contributions rose by 1.25% in April and from next year, the extra tax was to be rebranded as the Health and Social Care Levy.
Instead of paying National Insurance contributions of 12% on earnings up to £50,270 and 2% on anything above that level, it has increased to 13.25% and 3.25% respectively.
In July, the government raised the threshold on payments meaning employees can now earn £12,570 a year before paying National Insurance, up from £9,880 a year previously.
However, Trusspledged to reverse the increase despite findings by The Institute for Fiscal Studies (IFS) that the move would benefit wealthier households more.
Corporation tax:
Truss' pledge that the corporation tax rate will not rise to 25% in April 2023 - remaining at 19% - may also be confirmed.
Special Investment Zones
Reports suggest the mini-Budget will announce "special investment zones" in up to 12 UK areas. There is speculation the areas will be able to cut personal taxes, tear up affordable housing quotas, and even water down environmental pledges to get firms building. The plans are said to go further than the Freeports announced under Boris Johnson.
They could include West Midlands, Thames Estuary, Tees Valley, West Yorkshire and Norfolk, according to the Sunday Times.
Banker's bonuses
Unlimited bonuses for bankers could once again be permitted as the new Tory government attempts to win City support.
Chancellor Kwasi Kwarteng is weighing up scrapping a cap on huge bonuses. At the moment bosses are not allowed to award more than twice an employee's salary.
Stamp Duty and other tax cuts
The Government has scrapped "green levies", saving households about £150 each on their energy bills under the Energy Price Guarantee Scheme already published. This money is used to pay for schemes that roll-out insulation and renewable energy.
There have been suggestions that there may be a cut in income tax. That currently sits at 20% on annual earnings from £12,571 to £50,270.
There could also be a change to stamp duty, currently paid on property purchases over £125,000. -
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