The Chancellor, Jeremy Hunt, has announced a number of further U-turns since the mini budget in his speech this morning (17th October) with more details to be announced later today.
This morning's press conference reversed almost all tax measures announced previously in the mini budget, with only the cut to National Insurance and Stamp Duty set to remain.
This includes:
- Reversing the planned 1p cut in basic rate of income tax (will remain at 20%)
- Energy price guarantee will no longer last two years - it will last until April next year and then be reviewed
- Dividend tax cut will be abolished
- Axing VAT-free shopping for tourists and alcohol duty freeze
- Scrapping plans to repeal reforms to off-payroll working rules - also known as IR35 rule changes
This dramatic U-turn appears to be an attempt to deliver confidence and stability with Jeremy Hunt stating no government could control the markets but they could give certainty over public finances
Claire Lea, director at Prime has said:
Following the U-turn on Friday regarding corporation tax, we should not be surprised that more changes have followed.
Businesses and individuals want stability, and whilst many businesses will have already planned for the hike in tax in response to Rishi Sunak's plans set out in 2021, they will not appreciate the uncertainty of having this scrapped, and then reintroduced, causing companies to go back and forward on their business plans. For smaller businesses, this may also cause some stress if the announcement of the tax freeze had brought their company some relief.
However, one thing businesses should now look to do immediately is to plan and bring forward, where possible, any profits in advance of next spring, whilst the corporation tax rate sits comfortably at 19%.
The Medium-Term Fiscal Plan is set to be published on the 31st October and all eyes continue to remain on the PM and the new Chancellor. Hopefully there will be no more surprise announcements before then.
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