It’s been a busy month of business announcements, with a stream of mini-budget changes effectively reversing the changes made by Kwasi Kwarteng last month.
The new Chancellor of the Exchequer, Jeremy Hunt, made a statement on Monday, 17 October revealing measures ahead of the Government’s medium-term fiscal plan.
These changes should raise around £32bn a year in an attempt to protect the economy.
Let’s take a look at what this means for the country and businesses as a whole.
Corporation Tax
The largest u-turn of all of the announcements was the change to corporation tax – the original changes are now completely scrapped.
Corporation Tax will now go up to 25% for profits of £250,000 and over (rather than staying at 19% as Truss and Kwarteng had originally planned).
This means around £32bn extra cash for the economy.
Income tax change
The basic income tax rate will remain at 20% instead of decreasing to 19% and will not be cut until “economic circumstances allow”.
This marks a large change from Rishi Sunak’s original vision, which wouldn’t have come into place until 2024.
It’s a change that’s worth £6bn a year to the country.
IR35 & VAT-free shopping
Changes to IR35 are also being scrapped, along with the VAT-free shopping scheme.
This will save around £4bn in total, and will mean far less red tape for businesses to jump through.
Alcohol duty, stamp duty and National Insurance
Alcohol duty rates will be frozen for one year from February 2023, while the proposed stamp duty and National Insurance measures will stay in place.
This is worth around £600 million to the economy.
Energy bill relief
The energy bill relief scheme will remain to help households and businesses with soaring energy costs. However, the Government will launch a Treasury-led review of the scheme after April 2023.
“The Prime Minister and the Chancellor have agreed that it would be irresponsible for the Government to continue exposing the public finances to unlimited volatility in international gas prices”.
Further fiscal updates are still planned for Halloween
The Chancellor confirmed the fiscal plan is still set for 31 October and said there would be “more difficult decisions” to come.
Commenting on the measures, Liz Truss said:
“The British people rightly want stability, which is why we are addressing the serious challenges we face in worsening economic conditions.
“We have taken action to chart a new course for growth that supports and delivers for people across the United Kingdom.”
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