The mini-Budget that (almost) never was…
By Paul Brown, Tax Partner & Director of Advisory
So, following the mini-Budget that wasn’t really a Budget, and before the Medium-Term Fiscal event on 31 October, we have now had the new Chancellor deliver an emergency financial statement… By way of a health warning, what follows is based on tax policy at the time of writing and will not be updated for any future screeching changes of direction that may happen in the coming weeks…
It is probably easier to list those tax measures which have survived the appointment of Mr Hunt to his new role:
Stamp duty nil rate band increased to £250k
Abolition of the National Insurance rise and the future Health and Social Care levy
The Annual Investment Allowance will still be fixed at £1 million on a permanent basis
And that’s it… Every other tax measure that was introduced on 23rd September by the previous (again, at the time of writing) Chancellor has gone. In no particular order:
There will be no change to the change in corporation tax rates from 1 April 2023 (so it will still, at the moment, increase to 25%)
The basic rate of income tax will stay at 20% until economic conditions allow it to be reduced (the right economic conditions usually seem to exist just before an election…)
Dividend tax rates will stay at the current levels which were increased from 6 April this year
The off payroll working (aka IR35) rules will not now be abolished. Interestingly the Treasury seem to suggest a rising tax take as a result of this in coming years – implying a greater compliance effort by HMRC?
Duty free shopping for tourists will not now be introduced
The main criteria for deciding what measures to keep seems to have been how far down the legislative path the various measures have gone – which is certainly a novel way of deciding tax policy. Given Mr Hunt was appointed on Friday and made the statement on Monday one has to assume that he has had very little time to think any of this through – but then thinking things through seems to have rather gone out of fashion in the last few weeks…
In a post-Brexit, post-Covid world the mantra of many business gurus is that businesses should learn to embrace and even welcome uncertainty. In that context one can only praise government for giving business such a great opportunity to practice this by embracing what is uncertainty on a truly epic scale…
Now though, surely the plea from every business large and small must be for a period of stability – even a few weeks would give us a chance to get back to something approaching a settled tax environment. However, I fear with the medium term fiscal statement on 31 October and presumably a further Budget (mini or otherwise) in the spring this may just prove to be a vain hope…
Join us on 10th November for our exclusive update from the Bank of England West Midlands Agency.