The new Chancellor, Jeremy Hunt, has made a snap statement to bring forward/change the medium-term fiscal plan.
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Although it only feels like 5 minutes since the last mini-budget by the previous Chancellor, there have been a lot of changes.
With a few U-turns, including back peddling on the removal of the 45% higher rate abolished as well as going back on business corporation tax which was due to increase to 25%, then planned to drop back to 19%, but u-turned again to stay at 25%.
There were a whole lot of tax cuts, but not a lot to help the majority of people who actually needed the help!
Since then, the pound dropped, the markets got shaky, and we have a new Chancellor.
So, what are they announcing now? And what else will be scaled back?
They plan to “ensure sustainable public finances underpin economic growth”.
Key points from the statement
He confirmed the cut to business corporation tax would not go ahead, as already announced.
However, he is bringing forward the statement that was due to be held on 31 October 2022 as a way to bring confidence to the market.
Reversal of tax measures
Almost all announced tax measures are to be u-turned if they’ve not been introduced yet.
This includes the freeze on alcohol duty rates, IR35, and VAT-free shopping for overseas visitors.
The basic rate of income tax will stay at 20% indefinitely “until economic circumstances allow it to be cut”.
The previously announced energy support, including The Energy Price Guarantee and the Energy Bill Relief Scheme, will stay in place for the time being.
However, there will be a new approach to how people can be supported with energy costs after April 2023. Although it now looks like the Energy Price Guarantee will stay in place.
In the statement, he said that any support for businesses will be targeted to those most affected and that the new approach would better incentivise energy efficiency.
This current cap of £2,500 (“average household”) sounds like it will be removed. Here’s hoping the actual energy cost comes down, so we won’t need that cap!
There will be more announcements on tax and spending to bring down debt.
There will also be a speech to the House of Commons at 3:30 PM.