Reversal of Growth Plan – When Kwasi Kwarteng came before parliament to deliver his maiden fiscal statement, no one could have imagined that within three weeks, the vast bulk of his announcements would be reversed or that his first (mini) budget would be his last.
Jeremy Hunt, the new Chancellor, has dropped £32 billion in tax cuts out of a proposed £45 billion to calm markets and the public after 24 days of economic uncertainty.
Complete specifics of the Chancellor’s “Medium Term Plan” was released on October 31, although he reversed many of his predecessor’s proposed measures.
But what exactly had been altered?
Income Tax:
It was announced that the reduction in the base rate of income tax from 20% to 19% would be put on hold until “economic conditions allow for it,” following the decision to keep the 45% tax bracket for wealthy incomes.
Despite the repeal of the Health and Social Care Levy, plans to raise dividend tax rates by 1.25% points beginning in April 2023 have been scrapped.
Budgeting Help for Energy Expenses:
The revised energy assistance program may be the day’s most important news. The two-year price restriction on residential energy bills announced by the government has been extended until April 2023. A treasury review has been established to discover alternative methods of aiding homes and companies with energy prices and supply after that period.
The repeal of the IR35 reforms that took effect in 2017 and 2021 to regulate off-payroll labour has been scrapped.
The decision to allow VAT-free purchasing for tourists outside the EU was reversed.
The reversal of the Alcohol Duty Freeze Planned on February 1, 2023, has been cancelled.
With effect from April 2023, the current corporate tax rate of 19% will rise to 25%, as previously announced.
Where does the “Mini Budget” stand now after the reversal of growth plan?
National Insurance:
The Social Care Levy and the rollback of the National Insurance rise will proceed as scheduled.
The decision to exempt the first £250,000 of a property’s value from Stamp Duty Land Tax (or the first £425,000 for first-time buyers) will be upheld.
Investment allowances will remain at £1 million per year.
The Chancellor clarified that the measures outlined in this announcement were only a portion of the whole and that more challenging tax decisions were ahead.
On October 31, when the details and, more crucially, the costs were laid out in the Medium-Term Fiscal Plan, many tax experts reacted, analysed, and explained what this meant for you and your company.
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