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Chancellor Kwasi Kwarteng backs enterprise in bid to fire up economy

Mini-Budget: Foreign Minister Kwasi Kwarteng

Chancellor outlines measures to boost business investment alongside scrapping plans to raise corporate tax

  • Eliminated the rise in corporate tax
  • Boosting investment for companies
  • New help for start-ups

Mini-Budget: Foreign Minister Kwasi Kwarteng

Mini-Budget: Foreign Minister Kwasi Kwarteng

The Chancellor has outlined measures to boost business investment along with scrapping plans to increase corporate tax.

In a mini-budget that shocked markets (the pound fell below $1.09 for the first time since 1985), Kwasi Kwarteng promised to make the UK “a nation of entrepreneurs”.

As well as scrapping a proposed increase in corporate tax from 19% to 25% due in April, and introducing an “unprecedented set of tax incentives” for businesses, he put forward a package to boost investment.

The annual investment allowance (tax relief for companies investing money in new plant and machinery) was set at £1m permanently.

This has skyrocketed in recent years, complicating investment planning for industries that require a large amount of machinery, such as agriculture and manufacturing. It was due to drop to £200,000 a year next April. But Kwarteng said it “will remain at £1m… permanently”.

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Shevaun Haviland, director general of the British Chambers of Commerce, said: ‘Businesses will be delighted. It is a crucial tool that gives them the confidence to go ahead with the investment and will add greater certainty to their plans.”

The pro-business tone marked a significant shift after tax increases under Rishi Sunak and Boris Johnson’s infamous ‘F*** business’ comment in 2018.

Craig Beaumont, head of external affairs for the Federation of Small Business, said: “What we saw was a change in tone from the previous bullshit business, high-tax conservatives, a series of measures that support all business in this country”. It’s definitely a clean break.

‘The Truss Government is off to a good start. The Chancellor has rightly recognized that it is essential to eliminate taxes on employment, investment and entrepreneurs”. Kwarteng moved to help start-ups, extending venture capital trust and business investment schemes that offer tax breaks to investors who buy new shares in unlisted companies. He will ‘speed up’ reforms to the pension charge cap, allowing pension funds to invest in riskier UK assets.

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The moves were warmly received by the investment community, with Stephen Page, chief executive of SFC Capital, saying “entrepreneurs, angels and venture capitalists will have had a listening ear.”

At the same time, Kwarteng said limits on the seed company’s investment scheme and the company’s stock option plans would be increased to “make them more generous.” Under the first, businesses will now be able to raise £250,000, 66% more than before. Kwarteng said: ‘We want this country to be a democracy of corporate shareholders. These are crucial steps on the way to making this a nation of entrepreneurs.”

Russ Shaw of Tech London Advocates said: ‘Thousands of people have used these investment schemes and have had enormous success in supporting equity investment in UK companies.’

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Alex Davies, CEO of the Wealth Club, said: “The announcement will bring much-needed money to early-stage businesses at a time when we really need it.”

  • Reforms to IR35 accounting rules to simplify the tax system will be eliminated. IR35 was intended to prevent the self-employed from working for a company or council as a full-time employee without having to pay the additional tax that this implied. Changes in 2017 and last year placed the burden on organizations to assess whether these workers were self-employed or employees. Some said the changes, which are due to be rolled back in April, risked hurting the self-employed and self-employed.

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