Latest news and updates. All information was correct on date of publish.
21 October 2022 - Liz Truss's historic resignation
The market volatility following the budget and Ms Truss's historic resignation should not be misinterpreted in the parochial context of the Conservative Party convulsions. We should look at the bigger picture, and the larger question: Can Brexit Britain deliver on its promises to both the electorate and its key economic stakeholders in a financially illiquid environment? Or is a wider course correction required to restore growth?
Markets may initially have reacted positively to Ms Truss's resignation, but volatility should be expected to continue until the country is again on a sound footing.
17 October 2022 - Jeremy Hunt's emergency video statement
The new Chancellor Jeremy Hunt has delivered an emergency video statement confirming a reversal of “almost all tax measures” announced in last month’s mini budget.
Hunt has bought forward measures from the Medium-Term Fiscal Plan on 31 October in an attempt to calm financial turmoil following the mini-budget. So, what stays and what goes?
What has changed?
- Income tax: The reduction in the basic rate of income tax to 19% from April 2023 will no longer go ahead, meaning it will remain at 20% indefinitely. The Government has said they are aiming to proceed with the cut “when economic conditions allow for it and a change is affordable”. This follows on from the cancellation of the surprise announcement to reduce the additional income tax rate of 45% for individuals earning over £150,000 a year to 40%. Therefore, the 20%, 40% and 45% rates remain in force.
- Off-Payroll Working (OPW) rules / IR35: The repeal to the OPW rules is no longer taking place. Therefore, what was announced on 23 September by the former Chancellor Kwasi Kwarteng can be ignored. From April 2023, qualifying public sector organisations and medium to large businesses engaging with Personal Service Companies and intermediaries will need to continue to assess engagements for tax purposes and decide whether they need to deduct income tax and NIC from payments being made where the engagement is considered to be one of deemed employment under the OPW rules. More widely, all organisations in the UK need to continue to review and have controls in place to manage employment status when engaging with individuals directly or individuals performing office holder roles (including at a non-executive level). This is a key area of risk and one that HMRC regularly challenge.
- Energy support: Support for rising energy costs was announced prior to the mini budget, however this has now been scaled back. The energy price guarantee will be in place until April next year – instead of the two years previously confirmed.
- Dividends tax: The tax cut will be abolished, meaning the 1.25 percentage points increase will remain in place.
- VAT-free shopping for tourists: The scheme will no longer go ahead which would have cost the Government around £2 billion per year.
- Freezing alcohol duty rates: Kwarteng had announced a freeze from 1 February 2023 which has now been abolished.
Jeremy Hunt had also already confirmed that the proposals to remove the additional rate of income tax and to increase corporate tax will no longer go ahead.
- National insurance: On 22 September 2022, the National Insurance Contributions rise of 1.25 percentage points that was introduced in April 2022 was scrapped with effect from 6 November. You can read more about the detail here.
- Stamp duty: For house buyers, the Stamp Duty Land Tax nil rate band thresholds extensions remain – doubling to £250,000 and increasing to £425,000 for first time buyers, as well as the maximum value of property for which first time buyers can claim relief being set at £625,000
- Bankers’ bonuses: Lifting the cap on bankers’ bonuses also remains.
Follow us for commentary and analysis on the announcements made throughout the day.
Watch our mini budget webinar
On 27 September, our panel of experts discussed the mini budget and what this means for you – watch the webinar below: