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With so many U-Turns on tax policy and new Prime Minister, Rishi Sunak, taking charge, and the Autumn Statement being pushed back to 17 November, our tracker shows the state of play on taxes.
03 November 2022
UPDATED 3 NOVEMBER 2022
With so many U-Turns on tax policy and new Prime Minister, Rishi Sunak, taking charge, we have compiled a tracker table showing what has survived from the Mini Budget on 23 September 2022 and what has gone.
Chancellor Jeremy Hunt remains in place under Sunak and the date for the Autumn Statement has been pushed back from Halloween to 17 November.
Join us on Friday 18 November for our upcoming Autumn Statement 2022 webinar, where our panel of tax experts will be analysing the announcements and commenting on how these may affect you.
Check out our Autumn Statement predictions.
Sunak’s premiership is very likely to begin with spending cuts and tax increases with the aim of plugging a £35bn black hole in public finances and dealing with inflation (currently 10.1%). Analysis by the Resolution Foundation suggests a delay of a fortnight in the fiscal statement to 17 November will allow official figures to show the black hole has shrunk by up to £15bn.
When Sunak was Chancellor, he announced the rise in Corporation Tax to 25%, a rise in NICs (reversed from 6 November), and a freeze in personal tax allowances until 2026. He has also advocated removing the 5% VAT rate on domestic heating bills and cutting 1p off the basic rate of Income Tax.
We await to see how much Sunak and Hunt agree on tax and spend. A key discussion point is apparently a £5bn stealth tax through the further freezing of income tax thresholds and allowances beyond the next election. This is also termed "fiscal drag" as more and more people are dragged into paying more tax through inflation and wage rises whilst allowances remain frozen. The pension triple lock is also under review; abandoning this would save around £11bn a year.
Spending cuts may also be more severe than previously thought.
Mini Budget measures on 23 September |
Changes since announced |
Mini Budget status |
|---|---|---|
| Income Tax thresholds not mentioned but are currently frozen until 2026 by Sunak | New Chancellor considering extending the freeze to 2027/28 | Future policy remains unclear |
| Scrap 45p Income Tax rate on taxable incomes over £150,000 | Policy reversed 10 days later | Gone |
| Basic rate of Income Tax cut to 19p from April 2023 | Basic rate to remain at 20p indefinitely | Gone |
| NIC rise of 1.25% in April 2022 is reversed from 6 November 2022 | Policy retained | Safe |
| Dividend tax rise of 1.25% which took effect in April 2022 is reversed from April 2023 | Dividend tax rise to remain, which makes no sense as the rise was aligned with that for NICs. | Gone |
| Loans to participators (s455) rise of 1.25% to 33.75% to be reversed from April 2023 | Tax rate on loans to participators to remain at 33.75%. |
Gone |
| Health & Social Care Levy from April 2023 scrapped | Policy retained; H&SCL will not be introduced | Safe |
| Freeze Corporation Tax at 19% and stop the planned rise to 25% | Freeze reversed. Corporation Tax will rise in April 2023 to 25% on profits above £250,000 | Gone |
| Energy Price cap for 2 years for households and 6 months for businesses | Energy Price cap cut to 6 months for all (with a review to follow) | Radically curtailed |
| Scrapping the 2017 & 2021 off-Payroll working rules (IR35) from April 2023 | Policy reversed and rules remain in place, but see note below table | Gone |
| VAT-free shopping scheme for non-UK visitors to Great Britain | Policy reversed | Gone |
| Freeze in alcohol duty | Freeze scrapped | Gone |
| Annual Investment Allowance set permanently at £1m | Policy retained | Safe |
| Enhancing Seed Enterprise Investment Scheme, including allowing firms to raise £250,000 under the scheme from April 2023 | Policy retained | Safe |
|
The Company Share Option Plan limit allows businesses to offer employees share options worth up to £30,000. This is doubling to £60,000 from April 2023. |
Policy retained | Safe |
| Stamp Duty in England removed from properties worth up to £250,000, or £425,000 for first-time buyers purchasing properties for up to £625,000 | Retained for now | Safe, but for how long? |
| No increase in windfall tax on energy companies | Likely increase in rate of Windfall tax from 25% to 30% until 2028 on gas and electric firms until 2028 | Under review. We may find out on 17 November. |
| Increase defence spending to 2.5% of GDP by 2026 and 3% by 2030 | Considering a freeze at 2% of GDP until 2026, then increase it to 3% by 2030. | Under review |
| Increase benefits in line with earnings rather than inflation | Under review | We won't know the outcome until 17 November. |
| Commitment to the pension triple lock (state pension must rise by the highest of 2.5%, earnings or inflation) | May keep triple lock until 2025, but scrap it at next election | Under review |
| Office of Tax Simplification scrapped | Policy retained | Safe |
| Removal of cap on bankers' bonuses | Policy retained | Safe |
| New investment zones with 10-year tax benefits | Rumoured to be scrapped in favour of a revised urban regeneration policy | We won't know the outcome until 17 November. |
| 130% Super Deduction not mentioned, but set to expire on 31 March 2023 | New Chancellor has not commented on this, so still set to end next March | Future policy remains unclear |
| Moratorium on fracking removed | Moratorium reinstated by Sunak | Gone |
Although the Mini Budget was going to scrap the off payroll working rules from April 2023, this policy has been reversed so that the rules remain in place. However, there is one change which has not been reversed.
The off-payroll rules affect companies that meet TWO or more of the following criteria:
It is the last of these that is most interesting (more than 50 employees) in that this threshold changed from 3 October to 500 employees.
That being the case, there may now be more employers who have become exempt from the off-payroll rules.
With so many changes taking place to tax policies, it is challenging to keep up to date. We will, however, endeavour to keep our Budget tracker up to date and post new stories as we become aware of developments.
In the meantime, and in advance of the Autumn Statement on 17 November, if you would like to discuss how these changes in tax policy affect you and/or your business, please contact your usual Bishop Fleming advisor.
[Gary Mackley-Smith]
