New Chancellor rolls back many of the tax measures announced in last month’s ‘mini-budget’
On Monday 17 October, the new Chancellor Jeremy Hunt announced that almost all tax measures announced in last month’s Growth Plan – or mini-budget – will be reversed.
A wide of range of tax cuts were set out in the mini-budget by then Chancellor Kwasi Kwarteng on Friday 23 September (for details see our previous article here). The intention was to stimulate growth in the economy, make it more competitive and mitigate against the rising cost of living that is facing households across the UK. However, subsequent turmoil in the financial markets and increases in mortgage rates put the Government under pressure to revise its plans. Following weeks of speculation, Kwasi Kwarteng was replaced by Jeremy Hunt as Chancellor on Friday 14 October.
Making today’s announcement the new Chancellor said he has announced details to provide greater confidence and stability and avoid uncertainty ahead of the full medium term fiscal plan announcement which is scheduled for 31 October 2022.
What measures have been reversed?
- Income Tax: The basic rate of income tax will no longer be cut from 20p in the pound to 19p from April next year (note, the scrapping of the 45p tax rate had already been abandoned).
- Corporation Tax: Confirmation that the planned rise in Corporation Tax in 2023, from 19% to 25%, will now go ahead as planned (note, this was already announced on 14 October).
The Government will also no longer be proceeding with the cuts to dividend tax rates, the reversal of off-payroll working reforms, the new VAT-free shopping scheme for non-UK visitors or the freeze on alcohol duty rates.
What measures have been kept?
- National Insurance: The reduction in the rate of National Insurance paid by employees, employers and the self-employed will go ahead from 6 November 2022.
- Stamp Duty: Changes to the Stamp Duty thresholds for those purchasing a home in England and Northern Ireland, and which have already come into force, will be retained.
What measures are being kept ‘under review’?
A Treasury-led review will take place into the Government’s energy support schemes for households and businesses.
The cap on energy bills for households was initially introduced for two years, however this will now be guaranteed until April 2023 only, and will then be reviewed.
Consideration will instead be given to how support can be better targeted, for households and for businesses, and to incentivise energy efficiency.
What was missing?
While promising that the Government’s priority in making the difficult decisions that lie ahead will be the “most vulnerable”, there was no mention of whether benefits will be uprated from April in line with inflation. This was a commitment previously made by then Prime Minister Boris Johnson.
For further information
You can read more about the measures announced by the Chancellor in his statement here.
Employers For Childcare’s Family Benefits Advice Service provides free, impartial and confidential advice to parents on the financial support their family is entitled to and can help families work out how these changes may affect your household circumstances, as well as what financial support you are entitled to. To speak to an advisor call us on Freephone 0800 028 3008 or email email@example.com.