BDO United Kingdom, a tax and assurance advisory firm, released an article regarding what policies to expect from Prime Minister Liz Truss and how this will affect businesses, as well as individuals. Please find a summary of the article below.

EMERGENCY BUDGET 2022

  • An announcement of a new Energy Price Guarantee to freeze energy costs at their current level from 1 October 2022 is expected to be followed quickly by an Emergency Budget which is likely to focus on further measures to help households and businesses through the winter months.

Liz Truss’ Voting Record

  • Promised making tax cuts of around £30bn.
  • Not clear whether there will be any specific changes to capital allowances.
  • She has always voted in favour of capping VAT rates.
  • In favour of increasing personal income tax allowances - No direct mention of this in her campaign.
  • Reversing the April 2022 National Insurance Contributions (NIC) increase for individuals and employers is highly likely to happen.
  • Clearest statement on her Tax Policy - No new taxes

New Chancellor – Kwasi Kwarteng

  • Kwasi is aligned with Liz Truss’ policies on windfall taxes, raising income tax thresholds and reductions in Capital Gains Tax.
  • He traditionally supports low taxation however energy crisis will test this.
  • Expected to announce COVID-style cost-of-living support package for families and businesses in a matter of weeks.

Emergency Budget Proposals

  • Short term focus of the PM has been on supporting households through the winter, with measures for businesses less certain.
  • The government’s planned intervention in the wholesale energy markets will last 2 years for households but only 6 months for businesses.
  • Prime Minister has promised longer-term energy costs to support small local businesses (e.g. pubs) and an interim review of the business energy guarantee in January 2023.
  • Businesses can expect to benefit from the reversal of the April 2022 NIC increase and some measures specifically targeting energy costs.

No more windfall taxes

  • Liz Truss has argued strongly against the windfall tax on energy companies and ruled out any extension of it.
  • Chancellor will announce the cost of the Energy Price Guarantee as part of his Emergency Budget.

Read the full article here: Emergency Budget 2022 – What to expect from the new Prime Minister - BDO