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Update on the Mini Budget

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On Monday 17th October, the new Chancellor Jeremy Hunt made an emergency statement to the House of Commons to announce the reversal of almost all of the tax measures that had been included in the mini-budget on 23rd September that have not yet been legislated.

Key Measures Reversed

  • The cut to basic rate income tax from 2023/24 will not take place and the basic rate will remain at 20% indefinitely;
  • The 1.25 percentage point reduction in dividend tax rates, due from 2023/24, will be scrapped;
  • The 2017 and 2021 reforms to off-payroll working rules for the public and private sector will remain in place, reversing their removal in 2023/24;
  • The proposed VAT-free shopping scheme for non-UK visitors to Great Britain will not go ahead; and
  • The proposed freeze in alcohol duty rates for a year will not go ahead

As previously announced, it had already been decided not to proceed with the proposals to remove the 45% additional rate of income tax and to cancel the planned increase in the corporation tax rate.

Measures Under Review

  • The Energy Price Guarantee (EPG) was due to cap average domestic bills at £2,500 a year for two years from the start of October.  This will now be scaled back to last until April 2023. In the meantime, a Treasury-led review will be launched to consider how to support households and businesses with energy bills after April 2023. The review’s objective is to “design a new approach that will cost the taxpayer significantly less than planned whilst ensuring enough support for those in need.” Universal support for business (and other non-domestic users) was always due to end in April 2023.

Measures Retained

  • The reversal of NIC increases and cancellation of Health and Social Care Levy;
  • The cuts to Stamp Duty Land Tax;
  • The permanent setting of the annual investment allowance (AIA) threshold to £1m;
  • Enhancements to the seed enterprise investment scheme (SEIS) and company share option plans.

 

The Chancellor said that there would be “more difficult decisions to take on both tax and spending”. Government departments are being asked to find ways to cut their spending. More announcements are to come on 31st October, when the medium-term fiscal plan is published.

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