Less than a month ago, this accountant sat here writing a blog all about the (then) Chancellor Kwasi Kwarteng’s ‘Mini Budget/Growth Plan’. And it is fair to say, that this accountant did not think that in less than a month, she would be writing another blog to essentially say ‘ignore the original blog’.
But, that is where we find ourselves. After 3 weeks of economic turmoil, chancellors have been replaced, and so many U-turns have been made, we’re all suffering from fiscal whiplash.
So, when new Chancellor Jeremy Hunt effectively took a wrecking ball to the old Chancellor’s Mini Budget, what was left standing, and what has been demolished? We shall start with what remains, as that will be much quicker:
Measures Still in Place
These measures had already been legislated for, so would have been much trickier to U-turn on.
Health & Social Care Levy scrapped
From 6th November 2022, the 1.25 percentage points increase in NICs rates (that was introduced from 6th April 2022) will still be reversed.
Stamp Duty Land Tax threshold
From 23rd September 2022, the threshold for SDLT doubled from £125k to £250k. The threshold for first time buyers also increased from £300k to £425k (as well as the maximum property value on which first time buyers’ relief can be claimed increased from £500k to £625k). This remains in place.
Annual Investment Allowance
The temporary increase in Annual Investment Allowance to £1million that was due to return to £200k as of April next year is still to be made permanent.
Caps on bankers’ bonuses are still to be axed.
Two Mini Budget U-turns had already been announced, prior to the new Chancellor’s appointment:
- The additional rate of income tax would no longer be scrapped
- The corporation tax increase from April 2023 will no longer be scrapped, with the main rate of tax to increase to 25%.
With the appointment of a new Chancellor, the U-turns kept on coming. On Monday 17th October, Chancellor Jeremy Hunt stated:
“The Prime Minister and I agreed yesterday to reverse almost all the tax measures announced in the Growth Plan three weeks ago that have not been legislated for in Parliament”
- The IR35 reform that was due to be repealed from April 2023 will now no longer go ahead. The current IR35 rules will remain in place.
- The 1.25 percentage point increase to dividend tax that was introduced in April 2022 will no longer be reversed from April 2023. Dividend tax will retain the 1.25 percentage point increase.
- The Energy Price Guarantee that was due to last for 2 years will now only last 6 months in its current format.
- Alcohol Duty rates will no longer be frozen from February 2023.
So, this is where we stand as of 19th October 2022. However, as the last month has proved, in these current times, who knows what I’ll be writing in a month’s time. And we still have the ‘Medium Term Fiscal Plan’ due to be announced on 31st October 2022. I think I’m going to need something stronger than a coffee to get me through all of this!
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