Jeremy Hunt’s first move as the new Chancellor of the Exchequer is to reverse most of the major tax cutting measures announced by his predecessor in the now infamous “mini budget” on 23 September 2022.
His plans to scrap as many measures as possible from the mini budget will raise £32 billion a year by 2026/27, in an attempt to stabilise the financial markets and shore up the UK government’s finances.
The measures reversed in the announcement made on 17 October 2022 are as follows:
- Re-instate plans to raise Corporation Tax to 25% from April 2023;
- Suspend 1p reduction in the basic rate of income tax;
- Maintain additional rate of income tax;
- Maintain 1.25 percentage point increase in dividends tax rates;
- Maintain 2017 and 2021 reforms to off-payroll working rules (also known as IR35);
- Cancel VAT-free shopping scheme for non-UK visitors to Great Britain; and
- Cancel one year freeze to alcohol duty rates.
What measures from the September mini budget will remain in place?
- The reversal of the National Insurance Increase (effective 5 November 2022);
- Reductions to residential stamp duty rates (already enacted);
- Retaining the permanent Annual Allowance at £1 million per year;
- Retaining the Seed Enterprise Investment Allowance; and
- Retaining the Company Share Options plan changes.
Changes to the terms of The Energy Price Guarantee and the Energy Bill Relief Scheme
Both of the above measures are intended to support households and business with the cost of their energy and provide some relief from high energy prices.
The Energy Price Guarantee was to operate for two years. However, the Chancellor announced on 17 October 2022 that both of these methods of government support will only remain in place until April 2023.
A Treasury review is to be conducted to decide how to support households and business beyond that date so that the cost of providing government support will be significantly less than the £64 billion support packaged previously announced in September 2022.
The Chancellor stated that any support for business will be targeted to those most affected by high energy costs.
What happens next?
The “Medium Term Fiscal Plan” will still go ahead on 31 October 2022 with announcements on cuts to government spending.
Hopefully there will be no new tax measures announced in that statement – nor any reversals of previously announced policies!