Yesterday, the new chancellor Jeremy Hunt announced major revisions to the Growth Plan, initially announced by ex-chancellor Kwasi Kwarteng.
In his statement the new chancellor has said ‘The government has today decided to make further changes to the mini-budget, and to reduce unhelpful speculation about what they are, we’ve decided to announce these ahead of the medium-term fiscal-plan which happens in two weeks’. He went on to add that the government was reversing “almost all” of the tax measures announced in the mini-budget that have not yet stared going through parliament.
The changes revealed are:
- the basic rate of income tax will remain at 20% indefinitely. This will only change if the economic outlook is stable enough for this to be affordable for the Treasury
- the 45% top rate of income tax will not be scrapped.
- dividend tax will no longer be cut by 1.25 percentage points
- the planned rise in corporation tax will be re-instated, taking it up to 25% from April 2023
- the 2017 and 2021 off-payroll working reforms will remain in place
- VAT-free shopping scheme for non-UK visitors will no longer go ahead
- alcohol duty will be reviewed as usual, no freeze will take place
- Energy Price Guarantee Support announced in the Mini-Budget will only stay until April 2023, rather than the full 2 years for households.
However, the third National Insurance change this year will go ahead as planned, and the health and social care levy for 2023/24 remains abolished.
The stamp duty land tax will also remain cut.
Further changes to fiscal policy are still expected on 31 October 2022 and we will keep an eye on what this will mean for businesses and individuals.
