By Robin Stride
Chancellor Kwasi Kwarteng’s self-proclaimed ‘biggest tax cuts since 1988’ in his emergency mini-Budget have been hailed by financial advisers as good news for high-achieving senior doctors in private practice.
At a time when the Bank of England has warned that the UK may already be in recession, Mr Kwarteng pledged to ‘turn the vicious cycle of stagnation into a virtuous cycle of growth’.
In a move that will be welcomed by senior doctors, the additional rate of income tax will be scrapped. This is currently 45% on income over £150,000 and will no longer apply from April next year.
The basic rate of income tax will also decrease from 20% to 19% on income between £12,571 and £50,270. The former Chancellor Rishi Sunak had pledged to do the same but not until 2024.
Mr Kwarteng also announced that the planned rise in corporation tax would no longer take place – pushing some £19bn back into the economy.
The tax, which was due to rise to 25% in 2023, will now remain at 19%. He said: ‘We believe that high taxes reduce incentive to work, deter investment, and hinder enterprise.’
Patrick Convey, technical director with specialist financial planners Cavendish Medical, commented: ‘These big fiscal announcements are largely positive steps for high-achieving senior doctors with private practices.
‘There will need to be some discussions over the coming months to establish whether doctors’ trading structures are still tax-efficient in light of the income tax and corporation tax changes.
‘We should also remember that income tax thresholds are currently frozen until 2026 and wage increases in that time may mean paying higher tax on income.’
There was also a boost for those seeking property loans. Stamp Duty is no longer payable on the first £250,000 of a property price with immediate effect.
Previously, home buyers would pay stamp duty on the first £125,000. In addition, the bands of relief for first-time buyers were dramatically improved with nothing payable on the first £425,000, up from £300,000.
Mr Convey continued: ‘As ever when such generous announcements are made, we have to wonder where the funding will come from. This normally leads to market volatility too and we expect to see fluctuations in response.’
The Chancellor also suggested further tax changes were likely, adding: ‘We will review the tax system to make it simpler, more dynamic, and make it fairer for families.’