17 October 2022
On 23 September 2022, the now former Chancellor Kwasi Kwarteng announced a mini-budget outlining various UK tax cuts. Please see our article here for a summary of the changes that were announced.
These announcements proved to have a negative impact on the UK economy and the British Pound fell to a record low against the dollar.
Following a public backlash, Kwarteng reversed the income tax additional rate cut, before being sacked by Prime Minister Liz Truss and replaced as Chancellor by Jeremy Hunt.
On 17 October 2022, the newly appointed Chancellor reversed most of the proposals in his predecessor’s mini budget. In summary:
•The Corporation Tax rate will still rise from 19% to 25% on 1 April 2023.
•The reduction in the basic rate of income tax from 20% to 19% will no longer happen.
•The introduction of VAT-free shopping for overseas visitors has been scrapped.
This leaves only two of the original mini-budget tax related policies:
•The doubling of the level at which house-buyers begin to pay stamp duty land tax from £125,000 to £250,000; £425,000 in the case of first-time buyers.
•The reversal of the proposed 1.25% rise in National Insurance originally due to take effect from 6 November 2022.
Markets have reacted positively since the announcement, but it remains to be seen whether further changes are to be made.
Please get in touch if you would like to know how these changes may affect you and your UK tax affairs, or if you would like to discuss any UK tax matters more generally.