The mini-budget U-turn and what does it mean?
The new Chancellor of the Exchequer, Jeremy Hunt, announced these measures claiming that they are estimated to raise an additional £32 billion in taxes every year. More tax rises and spending cuts are expected to be announced by the Chancellor on the 31st of October, which the Office of Budget Responsibility, forecasts will accompany.
The changes announced include:
- The proposed removal of the 45% additional rate of UK income tax from 6 April 2023
- The proposed reduction of the basic rate of UK income tax from 20% to 19% from 6 April 2023
- The proposed reduction in the UK dividend income tax rate by 1.25% from 6 April 2023
- The cancelling of the planned increase to UK corporation tax, which will now increase to 25% from 1 April 2023 as had previously been intended
- The proposed repeal of existing IR35 legislation from 6 April 2023
- The VAT-free shopping scheme for non-UK visitors.
Some of the previous mini-budget proposals that have not been amended include:
- 0% rate of stamp duty land tax on residential properties applying to the first £250,000
- The previously planned health and social levy of 1.25% won’t take effect
- The rate of employee and employer national insurance contributions decreasing by 1.25% from 6 November 2022.
To conclude, it looks like more of the same policies that we have endured for the past 12 years, which do nothing to entice people to the UK or promote business growth.
We will be following the news closely and will give an update on the 31st of October when the new budget is announced.
If you would like to speak with a financial adviser about how the current market has impacted your investments, get in touch.