On 14 October 2022, Jeremy Hunt was appointed as the new Chancellor of the Exchequer following Kwasi Kwarteng’s departure.
Following his appointment, Jeremy Hunt has reversed the majority of the fiscal measures that were announced in the controversial “mini-budget” of 23 September 2022. The Chancellor has brought forward a number of tax policies ahead of the Medium-Term Fiscal Plan on 31 October 2022, where he will publish the government’s fiscal rules alongside the Office for Budget Responsibility forecast.
These government says that these changes will ensure the UK’s economic stability and enable the public financial markets to stay on a sustainable path. The policy reversals made by Jeremy Hunt are projected to save the government approximately £32 billion a year.
What reversals have been made to the changes announced on 23 September 2022?
- Rise in corporation tax – The previous reversal has been cancelled and this will rise from 19% to 25% in April 2023.
- Income tax rates remain – The basic rate of income tax will not be reduced to 19% and will remain at 20% indefinitely.
- No cuts to tax on dividends – The 1.25% cut to dividend tax has been cancelled.
- Easing of IR35 rules repealed – The plan to simplify tax rules for the self-employed have been axed.
- No freeze on alcohol duties
- No VAT free shopping scheme for overseas visitors
- Limit on energy price guarantee scheme – Originally energy prices for both consumers and companies were going to be capped for 2 years but now this support will end in April 2023. After April 2023, the scheme will become capped and limited, meaning it will only apply to certain households rather than a universal support package.
What measures remain?
- Increased stamp duty land tax (SDLT) threshold – The cut to SDLT in England and Northern Ireland has survived. The minimum SDLT threshold will still double from £125,000 to £250,000. The equivalent to SDLT in Wales, Land Transaction Tax (LTT), has a minimum threshold of £225,000.
- National Insurance rise cancelled – The reversal of the 1.25% increase will still take place on 6 November 2022.
- Cancellation of the Health and Social Care Levy – The additional 1.25% levy will not be introduced.
- Annual Investment Allowance – The amount businesses can invest with no tax charges will remain at £1 million.