Mini budget 2022
Twice a year the government will announce their plans for the UK economy moving forwards – the Spring Budget and the Autumn Budget. With a new prime minister and a cabinet reshuffle, we have now had what is being referred to as a ‘mini budget’ announced.
In this mini budget, there have been many announcements that will impact people across the UK.
On this page we will explain what has been announced, how this will affect your finances moving forwards, and ultimately how you can protect yourself.
What has been announced in the 2022 mini budget?
The main points to take away from the mini budget are:
- The basic rate of income tax has been cut by 1p to 19p from April 2023: 31 million workers could stand to save £170 a year. This cut has been brought forwards by a year, having been previously planned for 2024.
- Stamp duty threshold has been increased to £250,000 for borrowers and there will be no stamp duty fees for first time buyers up to £425,000: Those looking to purchase property have the potential for savings, with the price at which you will need to pay stamp duty fees being increased. This is in place instead of a stamp duty holiday but will only apply in England and Northern Ireland.
- 1.25% increase in National Insurance payments will be reversed from November onwards: The National Insurance increase brought in by Rishi Sunak in April has now been reversed. This could save millions of workers around £330 a year
- Cap lifted on banker’s bonuses (used to be twice the salary)
- Planned corporation tax rise from 19% to 25% has been scrapped: Businesses were facing a potential 6% increase in the rate of corporation taxes but this planned increase has been cancelled
- Introduction of low tax investment zones across the UK
- The top rate of tax for earners making £150,000 or more a year will drop to 40% from 45%: Those on higher rates of income will now face less tax costs
- £45billion of tax cuts planned by 2027
- The cost of the proposed energy support schemes will be £60billion for the next 6 months: Schemes such as the £400 energy support payment and new lower energy price cap will cost the government £60billion
- Increase in benefit amounts: Those on benefits such as Universal Credit could now potentially receive higher amounts as of April 2023, due to the rise in inflation. Kwasi Karteng focused mainly on possible cuts to benefits for those not adequately seeking work.
- Extra support for unemployed over 50s: Those over 50 will receive additional support to help them find work
How will this news affect the UK general public?
There are many positive points to be taken from the announcement. A lot of workers will save money on their income with the cuts to income tax and national insurance rates.
With a cost-of-living crisis in full swing, this will be welcome news for many. Rising costs everywhere we turn has caused concern for a lot of families across the UK. These changes may not have a huge impact over all but will be a step in the right direction, combined with the government support now available.
Of course, in many cases budgeting and careful financial planning will still be necessary to ensure bills can be paid comfortably. With the UK facing a recession, protecting your loved ones financial security will be vital.
Life insurance is the #1 way to protect your family, in the event you are no longer around to support them yourself. Though cutting monthly costs may seem necessary, monthly insurance premiums will often be very affordable and provide invaluable support further down the line.
How will this news affect self-employed people and business owners?
The cancellation of the corporation tax rise will be extremely beneficial for business owners. With a 6% rise in taxes cancelled, this allows business owners the potential for additional profit.
Anyone working on a self-employed basis will also benefit from this budget announcement. The cut in income tax and national insurance will equal savings on earning for millions of workers across the UK, including those who are self-employed.
Business owners and self-employed workers will likely have been impacted greatly by the cost-of-living crisis. With rising costs looming in all directions, taking measures to protect yourself is wise.
Policies such as income protection will provide tax-free payments every month if unable to work due to serious illness or injury.
Those who are self-employed or run their own business may struggle financially, if needing to take sick leave for an extended amount of time. This will allow some peace of mind, with the ability to rest and recover at your own pace.
Another great protection option for business owners or directors is relevant life insurance. A relevant life policy is also an extremely tax efficient way to insure your life. This is because you will pay for your policy through the business as a tax-deductible business expense.
For more information about income protection insurance CLICK HERE.
For more information about relevant life insurance CLICK HERE.
Interest rate increase
In more economic news, this week the Bank of England has announced an interest rate increase to 2.25%. This is another factor that will impact the finances of many people within the UK.
This year interest rates have been steadily increasing in an attempt to combat soaring inflation. This has increased pressure on many typical households, with a lot of families now worried about how they will afford rapidly rising prices.
It was previously stated that the interest rate would increase 0.5% (1.25% to 1.75%) as of October. This has now been updated to the new rate of 2.25% – a full percentage point higher than the current rate.
It has now been predicted that there is the potential for UK interest rates to soar to as high as 5.5% next year, after the value of the UK pound sterling has dropped significantly in recent weeks.
This will have a huge impact on anyone with a current variable rate mortgage or credit loan agreement, with repayment costs potentially rising significantly.
Mortgage protection insurance
Many high street mortgage lenders such as Santander and HSBC have increased prices charged for their base interest rates, in anticipation of expected Bank of England rises. This could lead to costs up to 0.8% higher for new buyers or anyone on a variable or tracker mortgage rate.
Those on fixed rate mortgages shouldn’t see a price increase for the time being but will face higher costs when their fixed term period ends.
Homeowners will be understandably worried about having to pay more on their monthly repayments, particularly with prices of basic essentials such as gas, electricity and energy costs having also increased over the last year. Energy suppliers have increased prices across the board and though there are measures such as the energy bills support scheme, this may not be enough help for many.
Under these new financial pressures, having a safety net in place could ease worries for many people. Policies such as critical illness cover or income protection will allow you to continue mortgage repayments even if needing time off work due to illness or injury.
Speak to one of our insurance EXPERTS for advice on how you can protect yourself, your mortgage, and your family without breaking the bank. Insurance rates can be extremely affordable, especially when consulting with specialists before applying.
We have secured great cover for people throughout the UK – regardless of health or lifestyle concerns that may have caused issues with other companies.
Below we have linked some useful resources for anyone who may need additional financial support during this cost of living crisis: