Following recent turmoil in the markets, the new Chancellor Jeremy Hunt decided to pre-empt the fiscal event due on 31 October by making a brief statement today. Mr Hunt confirmed that the central responsibility of a government is stability therefore he has reversed all of the tax measures proposed by his predecessor last month with a few exceptions.
o Tax - The basic rate of income tax will not be reduced and will remain at 20% for the foreseeable future.
The 45% rate of tax will be reinstated.
Proposed amendments to dividends rate tax are abolished, so that the rate of tax on dividends will increase by 1.25%.
The changes to IR35 regarding the self-employed will not go ahead.
o NIC – The decrease of 1.25% towards a Care levy will proceed, so rates of NIC are back to where they were earlier in the year.
o SDLT – the nil rate band remains increased to £250,000, and first-time buyers will pay no SDLT on the first £425,000, provided that the property consideration is less than £625,000.
o Energy – The energy price guarantee will remain in place until April 2023. The Treasury will undertake a review to design a new cost effective approach for next year.
The £1million Annual Investment Allowance will remain in place as will the Seed Enterprise Investment Scheme and Company Share Option Plan proposals.
There will be another mini budget on 31 October to include the Office of Budget Responsibility’s economic forecast.
17 October 2022
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