After an acknowledgement that parts of the mini-budget "went further and faster than markets were expecting", Jeremy Hunt clawed back a number of previously-announced tax policies.
What is still going ahead?
Previously announced three weeks ago, the Government has confirmed it will continue to abolish the new 1.25% health and social care levy.
The Government's press release suggests that planned tweaks to the limits to the Seed Enterprise Investment Scheme (SEIS) and Company Share Option Plans (CSOP) would also still go ahead.
What has changed?
After announcing a previous repeal to IR35 changes, the Government has now said that the current IR35 regime is here to stay.
Businesses will be well aware that there had been changes in 2017 (for the public sector) and 2021 (for medium and large businesses in the private sector) to shift the burden of assessing whether the legislation applies (and operating PAYE where it does) away from the personal service company and onto the entities engaging the personal service company.
At the mini-budget on 23 September 2022, the Government said that the 2017 and 2021 changes would be scrapped, and from April 2023, individuals providing their services via an intermediary such as a personal service company would once again be responsible for determining their employment status and paying the appropriate amount of tax and national insurance contributions.
Today's announcement means that the current regime, and burden for the public sector and businesses, is here to stay.
Other reversals from the mini-budget include:
- not proceeding with a new VAT-free shopping scheme for non-UK visitors;
- not proceeding with a 1.25% cut in rates to the taxation of dividend income;
- no freeze to alcohol duty rates. Other aspects of alcohol duty reform has been consulted upon will proceed in line with previously announced plans; and
- the basic rate of income tax in England will remain at 20% indefinitely or "until economic conditions allow for it to be cut".d
What it means for business
Businesses are craving stability and predictability. The last few weeks have been turbulent for the UK economy, impacting investment decisions and strategy.
The Government hopes that these measures allay some fears of unfunded tax cuts and over-reliance on Government borrowing. The Government's Medium Term Fiscal Plan, together with the publication of the OBR report, is still scheduled to go ahead on 31 October 2022.
Should you have any queries arising from the above update please do not hesitate to contact Jon Keeble, Caroline Colliston or your usual DWF contact.