In a Government U-turn, The Chancellor of the exchequer has scrapped most of the measures set out in the mini-Budget, including the planned cut to income tax.
In this morning’s emergency statement, he said: “We will reverse almost all the tax measures announced in the growth plan three weeks ago that have not started parliamentary legislation.
What is affected by the Government U-turn
Jeremy Hunt announced that Liz Truss’s s promise to support Britons by controlling the price of energy bills will now only last for 6 months until April 2023. The Government’s Energy Price Guarantee was originally put in place for two years.
The new chancellor said the government would review the cap on the price of energy unit to keep annual household bills at no more than £2,500.
The Government U-turn will also mean scrapping plans to reduce the basic rate of income tax from 20% to 19% in April next year. It will remain at 20% indefinitely.
Tax on dividends was increased in April and supposed to be reversed in April next year. That reversal will now be cancelled.
The increases planned for the rates of duty on beer, cider, wine and spirits will now go ahead, rather than being cancelled.
The government had been planning to repeal the changes to the rules on off-payroll working. Also known as IR35, these were introduced in 2017 and 2021.
But the regulations will now continue.
This will mean the responsibility for deciding the employment status of contractors will remain with the business employing them.
What isn’t affected by the Government U-turn
National Insurance changes announced in the mini budget were not part of the Government U-turn. This means that the 1.25% rise in National Insurance earlier this year will still be cancelled on the 6th of November 2022.
And the change in the threshold of how much a property has to cost before stamp duty is paid from £125,000 to £250,000 will stay.
First-time buyers will pay the tax on properties costing more than £425,000. Discounted stamp duty for first-time buyers will apply up to £625,000.
Help with the Government U-turn
Contact me if you need help with the Government U-turn on the UK Mini-Budget 2022 or any other aspect of your payroll or Self Assessment Tax.
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