NEWS / EIC News / Mini-Budget U-Turns… and what it all means for members

EIC News

17 OCT 2022


We share the latest from Westminster as Jeremy Hunt becomes Chancellor

Following the resignation’ of Kwasi Kwarteng as Chancellor last Friday (14 October), and the subsequent announcement that Jeremy Hunt was to replace him, today (Monday 17 October) saw a range of announcements made in an unexpected fiscal statement. 

Making the rounds of national media outlets over the weekend and this morning, Chancellor Jeremy Hunt announced a series of backtracks (or “U-turns”) on the mini-Budget’s tax and spend policies, which were confirmed in a statement to MPs in the House of Commons. 

Financial markets have been especially negative in their reaction to the mini-Budget with the pound’s value falling in international currency markets. The Bank of England raised interest rates in September which was followed by £60bn being provided in emergency support to pension funds. 

Today’s announcement sees the basic rate of income tax return to 20p in the pound, previously scheduled corporation tax increases return, and the planned cut for higher rate taxpayers scrapped. It also makes clear that the current energy support package is only in place until April 2023.

raised concerns over the lack of reassurance for the environmental sector on medium to long-term policy aims, with worries over the direction of travel which strongly hints at deregulation.

Commenting on today’s news, Guto Davies, head of policy at EIC said: “All businesses – no matter the sector they work in – want stability. It’s fair to say that the current environment in Westminster is doing little for business planning nor for building confidence – crucial if we are to navigate the challenging times which lie ahead.” 

“Whether the new Chancellor’s appointment and his announced U-Turns are enough for financial markets, Conservative MPs and the general public, remains to be seen. It’s clear to even amateur commentators that Prime Minister Liz Truss is in a vulnerable position politically and that the only thing that is certain is that uncertainty looks set to continue in the near-term.” 

“With this in mind, signing-up to our weekly political bulletin, curated by EIC's policy team, is the best way of keeping on top of events in Westminster and in the devolved nations, and how it impacts on our sector.” 

Announced in the ‘Mini budget’
22 September 2022

Announced in the fiscal statement
17 October 2022

Cut in the basic rate of income tax from 20p in the pound to 19p from April 2023. 

Basic rate of income to remain at 20p in the pound. 

Scrap the hike in corporation tax from 19% to 25%. 

Corporation tax rises to take place as previously planned. 

All higher rate taxpayers to pay the 40% rate, a reduction from the 45%. 

Planned cut in higher rate of income tax scrapped, as previously announced after the mini budget.  

Investment Zones to be set up in 38 local authority areas in England plus areas to be designated in Scotland, Wales and Northern Ireland. 

No information given in the statement, but policy expected to continue.

Energy price guarantee. 

Support between now and April will not change but will not continue thereafter.  

Beyond April, Treasury led review for how they support energy bills on an ongoing basis. 

Abolition of health and social care levy.

To continue as announced. 

IR35 U-turn shifts responsibility for employment status checks from businesses to the
self-employed. The mini budget announced plans to repeal the 2017 and 2021 IR35 reforms.

IR35 changes abandoned. 

From 6 April 2023, the additional rate applying to dividend income would be abolished and the 1.25% rise in the dividend rates, initially brought into force in April this year, would be reversed. 

Dividend tax plans scrapped.