When is the autumn ‘mini budget’ 2022 and what will it mean for your money?

Kwasi Kwarteng, the new Chancellor of the Exchequer, is set to announce a range of tax cuts on Friday 23 September as part of a ‘mini budget’.

Liz Truss, the new Prime Minister, has spent the summer emphasising her belief that lower taxes will spark economic growth across the country, and provide some respite against the rising energy bills, higher fuel costs and other elements of the cost of living crisis.

Those lower taxes will be unveiled in Parliament by her Chancellor in the mini budget, or mini Budget as it’s also being referred to.

It’s important to point out that it isn’t a true Budget, since it won’t be accompanied by the independent growth forecasts that are usually a feature of the occasion.

According to the government, waiting for the Office for Budget Responsibility to produce such forecasts would mean the mini budget would have to be delayed.

So what’s likely to be included, and what will it mean for your bank balance?

 When is the mini budget?

Prime minister Liz Truss and chancellor Kwasi Kwarteng will present the mini budget - officially known as a ‘fiscal event’ - to the House of Commons on Friday. 

The government is calling it the ‘growth plan’ with Britain facing a year-long recession and a cost of living crisis.

Stamp duty

The biggest leak ahead of the mini budget has centred on plans to change stamp duty.

Stamp duty is a tax you pay when you purchase a property, and is charged based on the transaction price.

Under the current system, you pay nothing on the first £125,000 of any transaction price, 2% on the next £125,000 (so the portion from £125,001 to £250,000), 5% on the next £675,000 (the portion from £250,001 to £925,000), 10% on the next £575,000 (the portion from £925,001 to £1.5 million) and finally 12% on anything above that point.

So to give you an example, if you buy a property for £200,000, you won’t pay any tax on the first £125,000 of that price, and then 2% on the remaining £75,000, meaning a tax bill of £1,500.

A temporary stamp duty holiday was introduced during the pandemic, initially meaning that no tax was paid on the first £500,000 of any transaction. This led to a sharp increase in demand from would-be homeowners, which the government seems keen to replicate.

It’s not yet clear precisely how Kwarteng intends to cut stamp duty ‒ we will have to wait until Friday’s speech for those details. There remain questions over how the likely stamp duty cut will marry up with the pre-existing shortage of property across the country. This shortage was a factor in the incredible house price growth seen since the pandemic.

It’s worth noting that stamp duty works differently in Wales and Scotland, as it is overseen by the devolved governments. Any changes announced by the Chancellor this week will only apply to England and Northern Ireland.

National Insurance

The reversal of the National Insurance hike introduced in April has been confirmed before Friday’s mini budget.

The rate of National Insurance contributions was hiked by 1.25 percentage points for all taxpayers at the start of the tax year, with the extra funds earmarked for the NHS, specifically social care.

The unpopularity of the move meant there was quickly a form of backtrack, with then-Chancellor Rishi Sunak increasing the threshold at which you start paying National Insurance to £12,500, bringing it in line with your personal tax allowance, which is how much you can earn before you start paying income tax.

Throughout her campaign for the leadership, Liz Truss pledged to scrap the increase but keep the higher threshold in place.

The 1.25 percentage point rise in National Insurance will be reversed from 6 November. Find out what it means for your take home pay. 

The government has said self-employed and company directors will pay a blended rate of National Insurance taking into account the changes in rates throughout the year when they submit their annual self-assessment return.

Marriage tax allowance

There is currently a marriage tax allowance open to some married couples and those in civil partnerships.

Everybody gets a £12,500 personal allowance, which is how much you can earn each year before paying income tax. If one partner doesn’t use all of that allowance, then they can currently pass 10% of the allowance onto their higher-earning partner, so long as they only pay the basic rate of income tax, through the marriage allowance.

It could mean that couples save as much as £262 a year on their income tax bills.

But, the new Prime Minister has said she wants to expand these tax relief, allowing the lower earning partner to transfer up to their entire personal allowance. In other words, the higher-earning partner could see their own personal allowance boosted by not just £1,250 but £12,500, and could save couples as much as £2,500.

Energy green levies

A portion of the energy bills we pay each month go towards ‘green levies’. This is a bit of a catch all term, covering the costs that energy suppliers incur from taking part in environmental and social policies, from replacing gas with biogas to measures that help low income households with their energy bills.

These levies account for around 8-12% of our energy bills, according to Ofgem, but they are being temporarily removed as part of the government’s energy price guarantee scheme.

It has argued that the move will save households around £150 a year.

Income tax

One pledge from Sunak that did have Truss’s backing was the ambition to reduce income tax by 1p in the pound from 2024.

There has been talk that the Chancellor, Kwasi Kwarteng, will announce that this tax cut is being brought forward to next year.

Investment zones

Another regular feature of the Prime Minister’s leadership campaign was the idea of investment zones.

The thinking is that introducing these zones in specific areas will spur economic growth, since they will not be subject to the same regulation, planning restrictions or tax rules as the rest of the country. 

However, it may not be only the businesses that operate there who benefit from a low-tax environment ‒ there has been speculation that even people who work and live in these zones will also be subject to lower rates of personal taxes.

Corporation tax

Finally, another tax cut we are almost certain to see on Friday regards corporation tax. 

At the moment, corporation tax is due to increase from 19% to 25% in April 2023. It’s a tax increase which Truss argued against throughout her leadership campaign, and seems set to be reversed in the mini budget.