23 September 2022
Chancellor announces new Growth Plan with the biggest package of tax cuts in generations
The Chancellor unveiled his Growth Plan today (Friday 23 September) to tackle high energy costs and inflation and deliver higher productivity and wages.
The most important points for hair and beauty business owners are:
- April 2022’s National Insurance rise and April 2023’s Health and Social Care Levy will be cancelled.
- Corporation tax rise cancelled, keeping it at 19%.
- Basic rate of income tax cut to 19% in April 2023 – one year earlier than planned – with 31 million people getting on average £170 more per year.
Responding to the announcements, Richard Lambert, NHBF Chief Executive, said:
‘The Chancellor’s bold statement represents a small break in the perfect storm. The cancellation of the NICs (National Insurance Contributions) rise and cut to Corporation Tax will be welcomed by many hair and beauty businesses. However, even after these cuts and the Energy Bill Relief Scheme, salons and barbershops will still face a turbulent winter of increased costs. We urge the Government to consider adding 100% business rates relief as part of its ‘ambitious package’ of reforms later in the autumn’.
National Insurance increase reversed
From 6 November 2022, the temporary 1.25 percentage point increase in National Insurance rates is being reversed for the rest of the financial year. The introduction of a separate Health and Social Care Levy tax in April 2023 has been cancelled.
Corporation tax rise cancelled
The Government has now cancelled this planned increase. Rather than rising to 25% from April 2023, the rate will remain at 19% for all firms, regardless of the amount of profit made.
Basic rate of income tax
From April 2023, the basic rate of income tax will be cut to 19%, which will mean 31 million people will be better off by an average of £170 per year. Due to the combined impact of the reversal of the HSCL and the reduction of the Income Tax Basic Rate, someone working full time on the current National Living Wage will see a tax cut of over £100.
The new measures come on top of the Government’s Energy Bill Relief Scheme for businesses, which will protect them from soaring energy costs this winter by providing a discount on wholesale gas and electricity prices.