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Summary of the UK Chancellor’s Announcement – 17th October 2022

Posted: 17th October 2022

Following Friday’s appointment of Jeremy Hunt MP as the UK’s new Chancellor of the Exchequer, he has today announced a range of changes to the measures announced in September’s ‘mini budget’. Many of these changes have been brought forward from the Medium-Term Fiscal Plan that is to be announced at Halloween, in order to calm markets following the end of the Bank of England emergency support package. Some of the main changes include scrapping the previously announced cut to the basic rate of income tax, whilst a review has been launched into the future of the energy support for households after April 2023. This follows the Prime Minister’s announcement on Friday last week that the previously cancelled increase in corporation tax will go ahead after all.

The following policies will no longer be going ahead:

  • Cutting the basic rate of income tax to 19% from April 2023. This 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
  • Introducing a new VAT-free shopping scheme for non-UK visitors to Great Britain – this will no longer go ahead
  • Freezing alcohol duty rates from 1 February 2023 for a year
  • As announced last week, the plans announced by Rishi Sunak to raise Corporation Tax to 25% from April 2023, which were then cancelled under Kwasi Kwarteng, have now been reinstated by the Prime Minister, and the rise will go ahead as originally planned

On support with energy bills:

  • The Energy Price Guarantee for households had been set to run for two years. However, a Treasury-led review will now be launched to consider the future of support for households 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 Energy Bill Relief Scheme for businesses had been set to end after 6 months anyway, and the Chancellor has confirmed that any support for businesses after this point will be targeted to those most affected, whilst the new approach will also aim to better incentivise energy efficiency

However, some of the policies announced by Kwasi Kwarteng in September do remain in place:

  • The government’s reversal of the National Insurance increase and scrapping of the upcoming Health and Social Care Levy will remain in place, meaning that the 1.25% rise in National Insurance will still be cancelled on 6th November
  • The £1 million Annual Investment Allowance, the Seed Enterprise Investment Scheme and the Company Share Options Plan will also continue

Government departments have also been asked to find savings in their budgets, with more detail to come on how much these will need to be, and where these savings will come from. You can find more detail on today’s announcement here.

Business Comment

Business Comment is the Edinburgh Chamber of Commerce’s bi-monthly magazine. It provides insight on Edinburgh’s vibrant business community, with features on the city’s key sectors, interviews with leading figures and news on new business developments in the capital.
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