The Mini-budget reversal

Yesterday, the 17th of October, the government brought forward the announcement of most the UK’s fiscal measures that were due to take place on the 31st of October. A decision on whether benefits will be increased in line with inflation is expected to be announced on the 31st of October 2022 when further fiscal measures will be announced. 

This comes after a turbulent few weeks since the announcement of the mini budget on the 23rd of September 2022. 

Before getting into the announcements made on the 17th October 2022, here is a quick recap of what has happened since the mini-budget 

  • Pound against dollar at its lowest. 
  • U-turn on the reversal of the scrapping of the 45% tax rate. 
  • U-turn on the decision to not increase corporation tax to 25% from April 2023. 
  • Chancellor Kwasi Kwarteng sacked; Jeremy Hunt appointed new chancellor.  
  • Jeremy Hunt announces some of the fiscal measures that were due to be announced on 31 October 2022. 

Okay, so what was announced on the 17th October 2022 

  • The basic rate of tax will remain at 20% for the foreseeable future. 
  • Off payroll reforms introduced in April 2017 and 2021 will remain. 
  • Increase in dividend tax will remain.  
  • The cap on energy prices, previously meant to stay in place for 2 years will now stay in place until April 2023 at which point support will be reviewed. This is obviously a huge disappointment for many.  
  • No new VAT- free shopping scheme for overseas visitors to the UK. 
  • No freeze on alcohol duty. 

The only tax cuts to that survived Jeremy Hunt are the reversal of the 1.25% national insurance increase as well as the increase in thresholds for stamp duty. 

The celebrations for the scrapping of the off-payroll reforms will have to wait! 

However, following the announcements, the pound recovered against the dollar and yields on 30 year gilts are easing back. 

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