Chancellor’s economic statement 17 October 2022

Summary of the tax policy changes announced in the Chancellor’s economic statement today, 17 October 2022

The PM’s new Chancellor, Jeremy Hunt, made a statement this morning, reversing most of the mini-budget decisions that have not been legislated for in parliament. Approximately £32bn of unfunded tax cuts have been ditched - in an attempt to regain some stability and protect the economy after the original Mini Budget announcements were made just over three weeks ago.

In summary the following changes to tax policies were announced:

• The basic rate of income tax will remain at 20% indefinitely instead of being reduced to 19%.
• Cutting dividends tax by 1.25% from April 2023. The 1.25 percentage points increase, which took effect in April 2022, will now remain in place.
• Repealing the 2017 and 2021 reforms to the off-payroll working rules (also known as IR35) from April 2023. The reforms will now remain in place.
• The new VAT-free shopping scheme for non-UK visitors to Great Britain is being scrapped. 
• No longer proceeding with the freezing alcohol duty rates from 1 February 2023 for a year.

The next steps of the Alcohol Duty Review announced in Growth Plan 2022 will continue as planned. The alcohol duty uprating decision and interactions with the wider reforms to alcohol duties under the Alcohol Duty Review will be considered in due course.

However, the cuts to stamp duty and reversal of the National insurance Levy will remain in place.

Energy bills support review

Cap on energy prices charged to households is now only guaranteed until April next year but will then be reviewed.

Looking beyond April, the Prime Minister and the Chancellor have agreed that it would be irresponsible for the government to continue exposing the public finances to unlimited volatility in international gas prices. A Treasury-led review will therefore be launched to consider how to support households and businesses with energy bills after April 2023.

The Chancellor also said in his statement that any support for businesses will be targeted to those most affected, and that the new approach will better incentivise energy efficiency.

The Chancellor is expected to announce further changes to fiscal policy on 31 October.

Click here to read the Chancellor’s statement in full Gov.uk

If you would like to discuss how the changes may impact you, then please contact your local Haines Watts offices in Derby or Nottingham, we'd be happy to start a conversation with you.