On Friday 14th October, Prime Minister Liz Truss announced a significant U-turn to the Mini Budget that was published last month. Our tax team explains the latest update and its implications.
Following widespread criticism of September’s Mini Budget, the Prime Minister held a press conference today to announce plans for a U-turn on the government’s current economic policy.
New Chancellor of the Exchequer
Kwasi Kwarteng shared news of his resignation as Chancellor via a public statement on Twitter. The statement referenced that the Prime Minister had asked him to stand aside.
Shortly after the statement had been tweeted, Downing Street confirmed that Jeremy Hunt had been appointed as the new Chancellor of the Exchequer.
U-turn on corporation tax
The Prime Minister announced that the corporation tax increase to 25% for larger companies – originally announced by Rishi Sunak in the Spring 2021 budget and then scrapped by Kwasi Kwarteng during the Mini Budget last month – will go ahead in April 2023 after all. According to Truss, the increase will generate an additional £18 billion for the country.
Two U-turns in three weeks
Reinstating the corporation tax increase for April 2023 is the second U-turn the government has announced since releasing its Mini Budget on 23rd September. On 4th October, former Chancellor Kwasi Kwarteng announced that the government had decided not to continue with their plans to abolish the 45% higher rate of income tax next year.
With Truss facing ongoing pressure to reverse the entire Mini Budget, this may not be the last U-turn announced before the fourth Chancellor of the Exchequer delivers his medium-term fiscal plan on 31st October.
We will continue to keep you updated on economic changes as and when they occur.
If you would like to know more about the changes announced today and how they may affect you and/or your business, please get in touch with your usual PKF SC contact or one of our tax partners: Gary Devonshire, Adam Rollason, Natasha Scott, Gavin West and Catherine Desmond.
