The Growth Plan 2022 – or ‘mini Budget’ – and what it means to the fleet industry
Officially published as the Growth Plan (23 September 2022), the so called ‘Mini-Budget’ from Chancellor Kwasi Kwarteng has delivered huge tax cuts, the highest for 50 years, while formally confirming the substantial spending and borrowing commitments.
These arise from the introduction of the Energy Price Guarantee that will protect consumers against rising energy costs; and the Energy Bill Relief Scheme, designed to protect businesses against the spiralling costs generated by wider geo-political events.
With these protective measures forecast to reduce peak inflation by around 5%, the second strand of the new government’s fiscal policy is to reinvigorate economic growth.
It intends to do this by targeting a medium term annual growth rate of 2.5%, via a range of tax incentives and reforms designed to deliver higher wages and greater opportunities, whilst also funding increased public spending.
To spark investment the government will reform the pension charge cap to stimulate pension fund investment and introduce around 40 new investment zones designed to encourage businesses to invest, build and create jobs across the country.
To incentivise private sector businesses in other parts of the country the government will abolish the increase in the rate of corporation tax due to come into effect in April 2023 and legislate to permanently set the Annual Investment Allowance, which gives a 100% first year allowance for capital expenditure, at £1 million per year.
What will this mean for the fleet industry?
First, given the industry’s growth product is salary sacrifice, although the income tax and NIC rate cuts will reduce the savings available, it should be borne in mind that net salaries will increase as a result of these changes. As a result, we don’t foresee any downturn in the popularity of salary sacrifice…
