Skip to content

Reversal of Mini-Budget Measures

On September 23, 2022, the former Chancellor, Kwasi Kwarteng, unveiled a mini-budget that outlined several tax cuts in the UK. To get a concise overview of the announced changes, we invite you to read our article on the subject.

However, these announcements had an unexpected negative impact on the UK economy, leading to a significant decline in the value of the British Pound against the dollar.

Due to public outcry, Kwarteng made a U-turn by reversing the proposed income tax additional rate cut. Subsequently, he was relieved of his position by Prime Minister Liz Truss, and Jeremy Hunt was appointed as the new Chancellor.

 

On October 17, 2022, the newly appointed Chancellor overturned most of the measures introduced in the previous mini-budget. Here’s a summary of the revised proposals:

The Corporation Tax rate will still increase from 19% to 25% effective from April 1, 2023.

The reduction of the basic rate of income tax from 20% to 19% will no longer take place.

The plan to implement VAT-free shopping for overseas visitors has been discarded.

As a result, only two of the original tax-related policies from the mini-budget remain unchanged:

The threshold at which house-buyers begin paying stamp duty land tax will be doubled, from £125,000 to £250,000 (£425,000 for first-time buyers).

The proposed 1.25% increase in National Insurance, initially scheduled to take effect from November 6, 2022, has been reversed.

The market has responded positively to these announcements. However, it is uncertain whether further adjustments will be made in the future.

If you would like to understand how these changes might impact your UK tax affairs or discuss any other UK tax matters, we encourage you to reach out to us.

Our team is well-equipped to provide you with personalized insights and guidance.