On Monday 17th October, the new Chancellor of the Exchequer Jeremy Hunt announced further changes to the Government’s Mini Budget, which was shared with the public in September. Following the second set of budget U-turns in four days, our tax team clarifies which policies are changing and which are remaining.
It has been a busy week for the UK government, with two public announcements, two Chancellor of the Exchequers and a series of significant changes to economic policy.
On Friday, Kwasi Kwarteng resigned from his role as Chancellor and strongly implied that Prime Minister Liz Truss had asked him to stand aside. Later that day, Downing Street confirmed that Jeremy Hunt had been appointed to replace him.
Timeline of changes to the Mini Budget
Friday 23rd September – Kwasi Kwarteng shared the Mini Budget 2022, a.k.a ‘Growth Plan 2022’, with the House of Commons and general public.
Monday 3rd October – The first Government U-turn is announced. Plans to abolish the 45% top rate of income tax would be scrapped.
Friday 14th October – Following Kwasi Kwarteng’s resignation, Liz Truss announces another U-turn. Corporation tax will increase from 19% to 25% in April 2023, as originally pledged in the Spring 2021 Budget.
Monday 17th October – As the new Chancellor of the Exchequer, Jeremy Hunt announces an Emergency Statement, which includes the largest number of changes to the Mini Budget since its release:
Mini Budget policy review – what has changed since September?
Original policy
Changed
Remained
The corporation tax rate will remain at 19% rather than rising to 25% in April 2023 as announced in the Spring 2021 Budget
Reversed on 14th October – the corporation tax rate will increase to 25% in April 2023 as had been originally planned
45% Higher Rate of Income Tax will be abolished from April 2023
Reversed on 3rd October
The Basic Rate of Income Tax will be cut from 20% to 19% from April 2023
Reserved on 17th October – the Basic Rate of Income Tax will stay at 20% ‘indefinitely’
Energy Price Guarantee will cap household bills at £2,500 for two years
Amended on 17th October – Energy Price Guarantee will expire in April 2023 and details will be reviewed in respect of future support to be provided
Freeze on alcohol duty rates
Reversed on 17th October
Dividend income tax Rates will be reduced
Reversed on 17th October
Off-payrolling reforms to be repealed from April 2023
Reversed on 17th October
VAT-free shopping
Reversed on 17th October
Business energy rates capped for six months
No changes have been made
The Health and Social Care Levy will be abolished, resulting in the reversal of the 1.25% rise in National Insurance contributions
No changes have been made
The threshold for Stamp Duty Land Tax will increase from £300,000 to £425,000 for first-time buyers and double from £125,000 to £250,000 for all buyers
No changes have been made
Annual Investment Allowance to be fixed at £1m per annum
No changes have been made
The Seed Enterprise Investment Scheme will expand to enable more companies to use it (full details in Mini Budget 2022)
No changes have been made
The Company Share Option Plan – qualifying companies will be able to issue up to £60,000 to employees from April 2023, double the current £30,000 limit
No changes have been made
If you would like more information on the Mini Budget changes and how they might affect you or your business, get in touch today to speak to one of our tax experts.
