What the mini budget means for you
Richard T Lishman Managing Director of the 4dentists Group of companies
Kwasi Kwarteng took to the stage today to deliver a mini budget – which, despite its diminutive name, was actually a rather intriguing statement containing significant tax breaks and more.
With this fiscal statement, the Conservatives wanted to encourage a new period of growth and prosperity in order to make modern Britain more globally competitive. As part of this, the treasury stated a rather optimistic goal of achieving 2.5% growth – a figure that seems all the more unlikely considering most experts believe that recession is imminent.
So, what does this mini budget mean for dentists?
First of all, the question on everyone’s lips for some time now has been what can be done about rising energy bills. It comes as no surprise that the Chancellor opened his statement speaking on this issue, not only promising the household unit limit price, but also extending this to businesses via the Energy Bill Relief Scheme. Under this plan, it’s thought that the average UK household bill will come in at around £2,500, with further relief available for vulnerable households. The Chancellor estimated that this measure would cost £60 billion – a figure that will be borrowed by the government instead of sourced from the energy giants. As such, this unit limit price is likely to be just a short-term relief, but one which means we can experience more sensible energy prices for the next two years compared to the ones that were previously forecasted.
The core of the mini budget was formed of tax cuts. For starters, the government has decided to reduce the basic rate of income tax by 1p in every pound – a measure that was originally outlined by Ex-Chancellor Rishi Sunak in the Spring Budget earlier this year. This has now been brought forward to April 2023, with an estimated reduction in tax equivalent to £170 per year.
High earners will also benefit from a cut to Income Tax. The Chancellor has abolished the 45% additional rate of tax, meaning that the top rate is now 40% and applies to anyone earning over £50,270. This will mean that high-earning dentists should benefit from a nice tax cut if they are earning over £150,000 a year. It is worth remembering, however, that these new rates do not apply to Scotland, where basic rate is 21% and the additional rate remains at 46%.
The previously proposed stamp duty holiday has now been turned into a permanent cut in stamp duty. It will only be applied to properties costing in excess of £250,000 , with first time buyers benefitting further with no stamp duty on the first £425,000 of a property price. They can also benefit from discounted rates on the first £625,000 – up from the previous £500,000. This means that any dentists seeking their first property or a new home will end up paying less on stamp duty, though whether this benefit is outweighed by the general huge increase in property prices is yet to be seen.
Though we knew it was coming, the reversal of increased National Insurance rates was welcome, especially as this measure will, on average, save people £330 a year. This change will benefit higher earners more, as they will save more over time compared to low-income individuals, so most dentists should experience a tidy saving.
Though unlikely to impact the majority of dental professionals, any staff who receive benefits and only work a small number of hours could see their benefits cut in order to encourage them to seek more hours, and better paid work. This may mean that if you have a dental nurse, for example, who only works one day a week but also receives benefits, they may ask for more hours or try to find employment elsewhere – definitely something to bear in mind.
Ultimately, though this is just a mini budget, there are some exciting benefits on offer for high-earning individuals. The Conservatives have heavily leaned into the idea of trickle-down economics, and by removing caps to bankers’ bonuses and making the biggest tax cuts for those already wealthy, they are hoping that this will encourage the growth and investment that they are aiming for.
Especially with a mini budget that is separate from the bigger, formal announcements in autumn and spring, the impact of these measures in action and whether some of these steps will even be implemented, will depend on how the UK economy continues to perform. April 2023 sounds close, but there is plenty of time for the measures proposed in this fiscal statement to be rescinded or amended.
Until then, we can enjoy tax cuts, worry slightly less about energy bills and indulge in a glass of wine or beer at a cheaper price (the planned duty rates for alcoholic beverages have been cancelled) – so there are definitely some positives here.
For more information please call 0845 345 5060 or 0754DENTIST.