The new Chancellor Jeremy Hunt has reversed many of the tax cuts announced by his predecessor, Kwasi Kwarteng, just last month in the Mini-Budget. We have summarised the key changes below.
Corporation Tax
The planned increase to corporation tax, from 19% to 25%, in April 2023 will now go ahead. Former Chancellor Kwasi Kwarteng had cancelled this change but Prime Minister Liz Truss later U-turned on this
National insurance
The 1.25% rise in national insurance will be reversed with effect from November. This measure is one of the very few which has been retained from the Mini-Budget.
Dividend tax rate
The dividend tax rate will not be cut in April 2023. The 1.25% points increase, introduced in April 2022, will remain in place, so dividends will be taxed at 8.75%, 33.75% and 39.35% depending on the level of income received.
Income tax – basic rate
The basic rate of income tax rate will remain at 20% and will not fall to 19% in April 2023. This will save the Government around £6 billion per year.
Income tax – top rate
The 45% top rate of income tax for those with income over £150,000 will not be reduced to 40%
Stamp Duty Land Tax
The changes to stamp duty land tax announced in the Mini-Budget will be retained.
IR35
The new Chancellor will not be repealing the 2017 and 2021 reforms to the off-payroll working rules (known as IR35). In the Mini-Budget it was announced that these rules would be repealed from April 2023. So the current legislation will stay.
Alcohol Duty
The freeze to alcohol duty rates from 1 February 2023 will no longer go ahead. The next steps of the Alcohol Duty Review announced in the Growth Plan 2022 will continue as planned.
VAT
The new VAT-free shopping scheme for non-UK visitors has been scrapped. This is said to be worth £2 billion per year.
Energy bills support
A Treasury-led review will be launched to consider how to support households and businesses with energy bills after April 2023.
You can look at the Chancellor’s statement in full here. The Chancellor is expected to announce further changes on 31 October.
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