Bank of England Base Rate Increase
- The Bank of England has raised the Base Rate for the seventh time since December 2021 to 2.25% in a bid to tackle inflation which is almost five times higher than the 2% target.
What does this mean?
- For those with tracker or SVR mortgages now is the time to review your deal.
- Those on fixed rate mortgages won’t see an immediate impact but can expect a ‘rate shock’ when they come to the end of their deal
- It’s not all bad news. Savers and investors could see an increase in the rates they are getting.
- The Base Rate rise to 2.25% can also be good news for people about to buy an annuity as the income you receive from them can be fixed on the day you purchase
- Anyone receiving income from a drawdown pension now has a more compelling reason to consider moving all or part of their funds to an annuity
Stamp Duty Slashed
Chancellor Kwasi Kwarteng has slashed stamp duty rates, saving the average buyer in England £2,500 in tax on a house purchase. No stamp duty will be paid on the first £250,000 of a property, and for first-time buyers the threshold will be £425,000
How much stamp duty would you pay now?
- Average £270,000 home: £1,000 saving £2,500
- £350,000 home: £7,500 saving £2,500
- £450,000 home: £10,000 saving £2,500
- £750,000 home: £25,000 saving £2,500
Mini-Budget in a Snapshot
- Kwasi Kwarteng announced the day before the mini-budget the 1.25 percentage point rise in national insurance will be reversed from 6 November.
- The Chancellor has confirmed benefit claimants working up to 15 hours a week are required to take new steps to increase their earnings or face having their benefits reduced.
- The Government will legislate to put new conditions on unions wanting to strike to ensure minimum services continue during strikes.
- The cap on bankers’ bonuses will be lifted.
- The Government is scrapping a planned increase in Corporation tax that had been due to rise from 19% to 25%.
- Low-tax investment zones will be created with no stamp duty to pay on newly occupied business premises, no business rates to pay and no national insurance on the first £50,000 earnt by new hires.
- The Government will introduce VAT-free shopping for tourists. #EmergencyBudget #MiniBudget
- Planned increases in duty rates for beer, cider, wine and spirits will be cancelled.
- The basic rate of income tax will be cut to 19p in April 2023 – one year early.
- The top rate of income tax of 45% rate for earnings over £150,000 to be abolished
