Chancellor Hunt rolls back Mini Budget measures

The new Chancellor of the Exchequer Jeremy Hunt has made an immediate mark by rolling back most of his predecessor’s Mini Budget.

In his first statement as Chancellor, Mr Hunt announced a reversal of almost all of the tax measures set out at the Mini Budget that have not been legislated for in parliament.

He also signalled major changes to the government’s energy support packages for businesses and households.

The Chancellor announced that the following tax policies will no longer be taken forward:

• Cutting the basic rate of income tax to 19% from April 2023. The basic rate of income tax will therefore remain at 20% indefinitely.
• Cutting dividends tax by 1.25 percentage points from April 2023. The 1.25 percentage points increase, which took effect in April 2022, will now remain in place.
• Repealing the 2017 and 2021 reforms to the off-payroll working rules (also known as IR35) from April 2023. The reforms will now remain in place.

The Chancellor also cancelled the VAT-free shopping scheme for non-UK visitors to Great Britain and the freezing of alcohol duty rates scheduled for next February.

Mr Hunt says that these measures will raise £32 billion for the government.

That is in addition to the previously announced reversals on corporation tax and the top rate of income tax.

 

Energy support review

The Chancellor also revealed that while the Energy Price Guarantee and the Energy Bill Relief Scheme will continue as previously announced until April, they will be reviewed for beyond that date.

A Treasury-led review will therefore be launched to consider how to support households and businesses with energy bills after April 2023. The objective of the review is to design a new approach that will cost the taxpayer significantly less than planned whilst ensuring enough support for those in need.

The Chancellor also said in his statement that any support for businesses will be targeted to those most affected, and that the new approach will better incentivise energy efficiency.

 

NICs and Stamp Duty

The few remaining policies announced in Kwasi Kwarteng’s Mini Budget include the 1.25% rise in national insurance contributions (NICs) that came in this year. This will be reversed from 6 November, while the Health and Social Care Levy has been cancelled.

Additionally, the level at which homebuyers will start to pay Stamp Duty Land Tax (SDLT) in England and Northern Ireland will be doubled from £125,000 to £250,000. First-time homebuyers will pay no SDLT on homes worth £450,000, up from the previous price of £300,000.

The £1 million Annual Investment Allowance (AIA), the Seed Enterprise Investment Scheme and the Company Share Options Plan will also continue to further support business investment.

 

Medium-Term Fiscal Statement

Having rolled back the majority of measures announced in the Mini Budget, all eyes are now on Mr Hunt for how he will steer the UK’s economy forward. The Chancellor will deliver the next part of the Medium-Term Fiscal Plan, alongside a forecast from the independent Office for Budget Responsibility (OBR), on 31 October.