Following the backlash caused by the Mini Budget announced three weeks ago, the new Chancellor, Jeremy Hunt, has today announced that almost all the tax measures announced that day will now be scrapped.

His predecessor and the Prime Minister had already announced the U turn on the cut of the 45% additional rate of income tax, and the cancellation of the planned Corporation Tax rise.

However, in his speech today, which has been brought forward by two weeks in an effort to stabilise the economy, the only surviving tax policies will be those which have already been passed by parliament, i.e. the removal of the 1.25% increase in NIC as a precursor to the full introduction of the Social Care Levy and the changes to the SDLT thresholds.

Taxpayers will feel the effect of this on NIC rates from November although it is not yet clear whether the dividend income tax rate increase of the same rate will remain or not from next April. Further information is due to be issued in relation to all policies.

The biggest disappointment for most taxpayers will be that the planned 1% reduction in the basic rate of income tax next year will no longer go ahead and the Chancellor plans to keep the current 20% rate “indefinitely”.

The planned Energy Price Guarantee will go ahead, but only until April 2023. During the next 6-months a Treasury-lead review will be undertaken in order to put plans in place that will support those most in need thereafter.

The Chancellor has stated that the most important issue right now is stability and the government doing their part to contribute to eliminating the current volatility.

There will no doubt be more difficult decisions to come.

For a reminder of other changes that were announced in the mini budget, please click the article linked here.

What next?

If you would like to understand more about how this impacts you and/or your business, please contact the CBW Tax Team or your usual CBW contact partner for more assistance or advice.