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THE NEW CHANCELLOR has today scrapped most of the mini-Budget announcements made by his short lived predecessor. What, if any, of the announcements made by Kwasi Kwarteng survived the latest round of U-turns?

In today’s brief Shipleys Tax blog, we look at the latest round of fiscal policy announcements, which may or may not stick around.

What’s left from the mini-Budget 2022

The Chancellor, Jeremy Hunt, announced today that the cutting of the basic rate of income tax (from 20% to 19%) would be postponed indefinitely – at least until “economic conditions allow a reduction”.

This had been rumoured toward the end of last week, but that wasn’t the end of the U-turns. The planned cutting of dividend tax (which was increased in line with National Insurance) has also been scrapped, as has the reversal of the controversial off-payroll working/IR35 rules. The cap on energy bills that was set to last for two years will now, however, be reassessed in April.

What has remained?

The only major measures that remain from the mini-Budget are the changes to National Insurance (1.25% cut retained), increase in the stamp duty land tax allowance, and the permanent increase of the annual investment allowance to £1 million.

More to follow.

THE EMBARASSING farce continues at Westminster with more twist and turns than reality TV. The PM Liz Truss has today overseen more U-turns to her now defunct flagship fiscal policy – the Mini-BUdget 2022.

Here at Shipleys Tax we look at the new merry-go-round of announcements made today. Quite how long these policies will last is anyone’s guess.

NEW Summary Budget measures – 14 October 2022

• Income tax
  • 45% Additional rate abolished (40% top rate now) SCRAPPED – 45% top tax rate to be reinstated
  • Basic rate cut to 19% (from 20%) – RETAINED FOR NOW

• NIC – April 2022 increase in NIC reversed from 6 November and Health & Social Care Levy scrapped: RETAINED
• Corporation tax to remain at 19% – planned 2023 increase to 25% cancelled SCRAPPED – Rise to 25% reinstated
• Off payroll working/IR35 – previous legislative changes to be repealed from April 2023 – RETAINED
• Introduction of VAT-free shopping for overseas visitors – RETAINED
• New “Investment Zones” with enhanced tax reliefs and relaxed planning frameworks – RETAINED
• Removal of cap on bankers’ bonuses – – RETAINED
• SEIS and CSOP limits to be increased. EIS and VCT reliefs will be extended beyond 2025 – RETAINED
• Annual Investment Allowance to stay at £1m for capital allowances – RETAINED
• No stamp duty on first £250,000, for first time buyers that rises to £425,000 – comes into operation today- RETAINED

All policies subject to change. Further detail to follow.

AFTER A DRAMATIC U-turn the Chancellor has decided to scrap the 45% tax rate. The move was widely criticised amid a cost-of-living and energy crisis and has gathered hugely negative momentum over the course of a few days.

At Shipleys Tax we have the latest on the mini-budget merry go round.

Turning point…

The Chancellor has confirmed that the tax cut will not go ahead, due to the distractions this policy has caused, reversing the announcement only made a few days ago to a lot of fanfare.

Now, from 6 April 2023 those earning over £150,000 will continue to pay the top rate of 45% income tax. However, due to other planned tax cuts, those with income over £150,000 will pay just 38.1% income tax on dividends from 6 April 2023 (currently 39.35%), meaning there will still be an incentive (albeit a smaller one) to delay dividends until on or after 6 April 2023.

The Chancellor is set to announce his medium-term fiscal plan on 23 November.