Less than a month after September’s derided mini-Budget, the new Chancellor Jeremy Hunt yesterday reversed many of the major tax announcements made by his predecessor Kwasi Kwarteng.
We are therefore largely back to the plans made by Rishi Sunak.
Key points announced by Jeremy Hunt include:
Hunt pared back the energy price guarantee, confirming the measure will now remain only until April 2023. The universal support was supposed to last for two years.
He also scrapped the pledge to freeze alcohol duty rates from 1 February 2023 for a year, much to the dismay of the hospitality sector.
Some tax cuts have remained, including:
The Chancellor’s medium-term fiscal plan is scheduled for 31 October. It will be released alongside forecasts from the Office for Budget Responsibility, and Mr Hunt has hinted we may see further tax announcements then.
Harwood Hutton’s Head of Tax Cormac Marum described Jeremy Hunt’s statement as a hand-brake turn on the Government’s tax policy.
“Virtually all the signature measures announced in Kwasi Kwarteng’s ‘fiscal event’ on 23 September 2022, which he planned with Prime Minister Liz Truss, have now been consigned to the dustbin,” said Cormac.
“All that seems to remain is the 1.25% reduction in NIC rates which has apparently managed to sneak through Parliament before Jeremy Hunt could do anything about it.
“Owner managers of companies are bearing the brunt of the tax changes announced yesterday – the rate of corporation tax is facing the single greatest increase in its history and the 1.25% surcharge on dividend tax is staying despite the equal reduction across the board in NIC rates on which it was originally justified.
“Who knows if this humiliating reversal in Government policy will assuage the markets and bring much needed stability to the exchange rate? Perhaps what is needed is a full Budget showing both sides of the Government’s ledgers together with an independent OBR assessment.
“It’s not that long ago that such an approach was the standard way to operate; it was the standard way because it made sense.”
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