Three weeks after the bold mini-budget statement made by former Chancellor, Kwasi Kwarteng, the newly appointed Chancellor, Jeremy Hunt, has announced the reversal of almost all tax measures, including the basic rate income tax decrease and the repeal of the off-payroll working rules.
The original Energy Price guarantee, which limited the price that suppliers could charge for energy, was to be put in place for two years. Hunt announced that this would now be limited to six months, essentially to cover the upcoming winter months, with a plan to review in April 2023.
A new approach, which is yet to be announced, will be introduced to assist those most in need.
Summary of reversals
- Hunt has indefinitely suspended the cut in the basic rate of income tax which is to remain at 20%.
- The planned cut to the rate of dividend tax is to be abandoned, meaning that the basic rate will remain at 8.75%, higher rate at 33.75% and the additional tax at 39.35%.
- VAT-free shopping for tourists has been scrapped.
- The alcohol duty freeze has also been scrapped.
- Plans to repeal the reforms to off-payroll working rules (also known as IR35) have been abandoned.
- The PM, Liz Truss, announced on Friday 14 October that the plan to scrap the upcoming corporate tax increase has also been abandoned.
Summary of changes that will go ahead
- The cuts to stamp duty and National insurance will remain in place. This means that national insurance contributions will decrease from next month, as planned.
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