What does the governments mini-budget update mean for you?

Following on from Kwasi Kwarteng’s original mini budget, announced in September, an updated version was announced on 17 October 2022 by the new Chancellor, Jeremy Hunt. 

A number of changes were made, including several U-turns on proposed tax cuts. This article provides updated information to our previous article, ‘What does the government’s mini-budget mean for you?’. 

Cancellation of changes announced in the updated mini budget 

Income Tax 

Basic rate of income tax was originally proposed to be reduced to 19%. Following the update, this change has been reversed and it will remain at 20% ‘indefinitely’. 

The higher rate income tax of 45% for earnings above £150,000 was set to be abolished. However, this has now been cancelled and the higher rate will remain in place. 

Corporation Tax 

An increase in corporation tax from 19% to 25% in April was due to be cancelled in the original mini budget. This has now been reversed and it will increase to 25% in April 2023. 

Energy Bills 

Originally, a UK-wide household cap of £2,500 was proposed for gas and electricity bills annually for the next two years. The updated budget has shortened this energy price guarantee to this winter through to April 2023. However, a Treasury-led review will investigate what measures should be introduced after this date. 

IR35 Rules 

The government initially promised to change rules on off-payroll working so companies were no longer responsible for ensuring their contractors were paying the correct tax amounts. This reform, which was set to cost £2bn a year, is no longer going ahead. 

Other cancellations 

Further cancellations were announced, including: 

• VAT- free shopping for overseas visitors 
• The freeze on alcohol duty 
• Tax cuts on shareholder dividends 

These cancellations are estimated to save over £3bn. 

Retained changes in the updated mini budget 

The plan to reverse the National Insurance contribution increase and abolish the Health and Social Care Levy is being retained. It has been confirmed that the reverse will come into force on 6 November. 

The cut to stamp duty is planned to continue, meaning that there will be no stamp duty on the first £250,000 on homes. Additionally, first-time buyers will see no stamp duty on prices up to £425,000. 

The removal of a cap on banker’s bonuses is set to remain as Jeremy Hunt made no mention of a U-turn. It is understood that the Prudential Regulation Authority (PRA) will hold a consultation on the plans later this year. 

Further support 

For more in-depth guidance or support on the issues covered in this article, book a free 30-minute consultation with our Employment team today. 

This content is correct at time of publication