Chancellor Jeremy Hunt has announced reversals of most of the measures announced in the recent Mini Budget.
The changes have been brought forward from the publication of the government’s Medium-Term Fiscal Plan, which is set for 31 October.
Mr Hunt announced that the following tax policies will no longer be taken forward:
- cutting the basic rate of income tax to 19% from April 2023. The basic rate of income tax will remain at 20% indefinitely.
- cutting dividend tax by 1.25 percentage points from April 2023. The 1.25 percentage point increase, which took effect in April 2022, will remain in place.
- repealing the 2017 and 2021 reforms to the off-payroll working rules (also known as IR35) from April 2023. The reforms will remain in place.
The changes follow previously announced decisions not to proceed with proposals to remove the additional rate of income tax and to cancel the planned rise in the corporation tax rate.
The Chancellor also revealed that while the Energy Price Guarantee (EPG) and the Energy Bill Relief Scheme will continue as previously announced until April, they will be reviewed for beyond that date. A Treasury-led review will therefore be launched to consider how to support households and businesses with energy bills after April 2023.
Commenting on the changes, Martin McTague, Chair of the Federation of Small Businesses (FSB), said: ‘The Chancellor is right to highlight the need for stability, following all of the political turmoil and chopping and changing which has made it virtually impossible for businesses to plan and make investment decisions.
‘Small businesses want to be growing and investing, but will need economic conditions to improve and sky-high operating costs brought down in order for them to be front and centre of future economic recovery.
‘There are significant recessionary pressures causing severe problems for small firms and the people who work for them – while the Chancellor has focused on reassuring markets . . . , the government must combine this with pro-growth measures that support the real economy.’