Reversing the budget

Anybody for a round of Hokey-cokey? It’s hard to keep up with Downing Street right now. Kwasi Kwarteng’s “mini budget” turned out to be anything but “mini” in terms of the repercussions. As a result, he was swiftly removed from position, and Jeremy Hunt installed in his place. And as the new Chancellor, Jeremy Hunt was certainly not slow in making changes. In fact, many of the policies proposed by Kwasi Kwarteng have been swiftly ditched.

So, what was announced in the mini budget, and where are we right now?

Income Tax

What was announced in the mini-budget?

The basic rate would be cut from 20% to 19% starting in April 2023.

What is the position now?

The basic rate of income tax will remain at 20%.

Corporation Tax

What was announced?

Cancel the proposed increase in corporation tax which is due to rise from 19% to 25% in April 2023.

What is the position now?

The increase in corporation tax will happen in April 2023.

National Insurance

What was announced?

Reverse the recent rise of 1.25% in National Insurance, starting from November 2022.

What is the position now?

This policy will remain, so National Insurance will reduce as planned.

Energy Bills

What was announced?

An energy price guarantee would be in place for two years, capping the unit costs of energy.

What is the position now?

The timeframe has been reduced from two years, instead ending in April 2023. At that point a further review will be held.

Stamp Duty

What was announced?

No stamp duty to be paid on the first £250k of the property’s value. For first time buyers it applies to the first £425k.

What is the position now?

This policy is to remain in place.

Alcohol Duty

What was announced?

There would be a freeze on alcohol duty.

What is the position now?

This has been reversed and there is no longer a freeze in place.

IR35 Rules

What was announced?

The rules for off-payroll working (known as IR35) were to be changed, so companies would no longer be responsible for ensuring their contractors are paying the right amount of tax.

What is the position now?

This reform will no longer go ahead.

In short, it looks like the majority of proposals from the “mini budget” have simply been reversed. The interesting part of this is that Liz Truss was voted for as Prime Minister by her fellow Conservatives largely based on her promising to deliver those policies delivered in the mini budget. There feels a certain irony that it looks like the Prime Minister is now delivering solutions more inline with what Rishi Sunak was proposing. Hopefully there won’t be too many further changes ahead and we can at least get on with things…