A lot has happened since, the now-former, Chancellor Kwasi Kwarteng presented his Mini-budget, also labelled as his Growth Plan, to the House of Commons in September. Not only have we welcomed a new Chancellor, our fourth within the last three months, but a number of the measures originally set out have been adapted or completely removed, leaving it difficult to digest exactly what is left of the Mini-budget.
To help you understand the changes a little better, we’ve pulled together our DJH Mitten Clarke Mini-Budget Reversal Report which looks at the new Chancellor’s announcements in detail but here are some of the key highlights:
What’s gone
Corporation Tax
As announced on Friday Corporation Tax, which was also due to remain at its current rate of 19%, will instead increase to 25% from April 2023 and is expected to raise an extra £18bn per year in taxes.
Income Tax
The planned 1p cut in the basic rate of income tax, first proposed by Rishi Sunak, and then brought forward a year by Kwasi Kwarteng, has now been postponed indefinitely and will remain at 20%.
Staying with income tax, the abolishment of the additional rate (45%) will also be abandoned, as announced shortly after the Mini-budget on the 3 October.
IR35 Reforms
One of the surprise announcements of the Mini-budget was the intended repeal of the IR35 reforms. This won’t make it out of draft legislation though and will not be part of the forthcoming Finance Act after being cancelled by the Chancellor in his update.
Over the last 5 years, changes to IR35 have been a bone of contention for businesses up and down the country. During this time, the changes have resulted in the payment of contractors and freelancers becoming more complicated, time-consuming and expensive than ever before, so this has been met with a mixed response.
Other measures cancelled
Also, part of the sweeping cancellations announced by the Chancellor:
- VAT-free shopping and the alcohol duty freeze will no longer go ahead.
- The dividend tax cut will be abolished.
What’s changing
Cost of Energy Support
A measure that was warmly welcomed within the budget was the support outlined for both individuals and businesses by both the Energy Price Guarantee, for households, and the Energy Bill Relief Scheme, for businesses. It was part of the Prime Minister’s promise that this would be kept under control for two years.
However, the Chancellor has instead announced this support will now only last until April 2023, putting this down to the two-year price guarantee being ‘the biggest single expense in the Growth Plan’. Instead, a Treasury-led review will take place to see how support can be given to those who most need it, whilst costing the taxpayer less. It was also hinted that there would be incentives launched for those looking to be more energy efficient.
What’s staying
National Insurance
The cuts to the National Insurance (NI) contribution, of 1.25% for employees, employers and the self-employed will remain. This also means that the Health and Social Levy, which would have been funded by this increase, will also no longer be going ahead, as outlined in the Mini-budget.
Stamp Duty
As will the cuts announced for Stamp Duty, with the nil-rate band increasing to £250,000 for all buyers, with first-time buyers seeing no Stamp Duty payment for homes up to £425,000.
Need to know more?
The changes that have been made since the Mini-budget went live are unprecedented. If you’re finding it hard to keep up then speak to your Client Manager who can talk you through everything you need to know.
