New Chancellor reverses most of the measures from the mini-budget

Today (17 October), the new Chancellor, Jeremy Hunt has announced a government U-turn on the proposed tax cuts announced in the previous mini-budget by his predecessor less than a month ago. This has been described as a dramatic move by the government in a bid to stabilise the markets by demonstrating a more stable approach to the UK’s current financial situation.

This was in addition to the reversal by the previous Chancellor of the proposed abolition of the additional rate of income tax from 6 April 2023 and the recent announcement by the Prime Minister (at the time of writing!) that the corporation tax rate will increase to 25% from 1 April 2023.

Whilst the proposed abolition of the Health and Social Care Levy will go ahead, along with the Stamp Duty Land Tax changes, the following proposed changes will no longer take place:

• The reduction in the dividend rates by 1.25 percentage points from 6 April 2023. These will therefore remain at 8.75%, 33.75% and 39.35% for a basic rate, higher rate and additional rate taxpayer, respectively
• The reduction in the basic rate of income tax from 20% to 19% from 6 April 2023
• The abolition of the 2017 and 2021 changes to off-payroll working rules (IR35). This will mean that the responsibility for determining the employment status and paying the appropriate amount of tax and National Insurance, for individuals providing their services via a personal service company will remain with the engager
• The new VAT-free shopping scheme for non-UK visitors
• The freezing of alcohol duty rates for 1 February 2023 for a year.

Whilst not a tax, the Chancellor announced that whilst the proposed help with energy bills will remain for all until April 2023, there will be a review of what help with be provided after this date, and to whom.

Whilst this remains an unsettling time with changes in direction of government policy, the team at Mercer & Hole will continue to update our clients with the latest changes and what this might mean for you. Please do not hesitate to contact us if you need our help or support.