Fiscal U-Turn: Majority of ‘mini-budget’ measures reversed

by | Oct 17, 2022

The Chancellor, Jeremy Hunt MP, is reversing almost all tax measures announced in the UK Government’s Growth Plan three weeks ago

In a short statement this morning, the new Chancellor announced the overturning of tax measures introduced by Kwasi Kwateng’s ‘mini-budget’ last month. The VAT-free shopping scheme for non-UK visitors will be scrapped, along with the 1p cut to Income Tax and non-payroll working reforms. The cut to National Insurance and Stamp Duty will go ahead.

In his statement, he said: ‘It is a deeply held Conservative value, a value that I share, that people should keep more of the money they earn. But at a time when markets are rightly demanding commitments to sustainable public finances, it is not right to borrow to fund this tax cut. So I’ve decided that the basic rate of income tax will remain at 20% and it will do so indefinitely until economic circumstances allow for it to be cut.’

This comes two days after PM Liz Truss announced a U-turn on corporation tax and the sacking of the then Chancellor Kwasi Kwarteng.

On the U-turn, Victoria Brownlie, Chief Policy Officer, says: ‘This constant flip-flopping makes it impossible for businesses to plan or build contingencies for the year ahead. We need stability. If the Government is determined to push ahead with this increase in Corporation Tax, then they must be prepared to extend support on energy bills post-31 March 2023, especially for high energy-using businesses like hair salons and spas that cannot simply cut down their use. Otherwise, businesses are faced with an imperfect storm of wage rises, tax increases and a huge jump in energy costs at a time when they’ve barely come up for air since Covid. This will be untenable for many. 

‘The announcement neglects the reality that shops, salons and other businesses pay people’s wages and upskill workforces. Without them, the Government will be in much greater trouble. If the Prime Minister is serious about growth, her team needs to be working with businesses, particularly small and micro businesses which employ the vast majority of the workforce, to understand how they can achieve this together.’

News on sustained sustained energy support for the beauty industry after March 2023 is currently being reviewed by government. It is important that we gather as much information on the rising cost of running a business via the government’s energy survey. The deadline for submissions is Monday 24th October.

 

Take the survey today

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