Chancellor’s Statement: 17 October 2022

In an extraordinary and unprecedented move, the Chancellor has announced this morning that nearly all the tax changes detailed in the 23 September ‘mini-budget’ are to be scrapped.

In addition to the previously announced U-turns on the rate of Corporation Tax and the abolition of the additional 45% rate of Income Tax, today’s statement indicated that only the planned cuts to National Insurance and Stamp Duty Land Tax will go ahead. Importantly:

• The basic rate of Income Tax will remain at 20% indefinitely and will not decrease to 19% in April 2023 nor April 2024
• Reduction to dividend tax rates will not go ahead from April 2023: rates will remain at 8.75%, 33.75%, and 39.35%
• Changes to the off-payroll workers (IR35) rules announced in 2017 and 2021 will not be reversed
• The energy price guarantee will be effective until April 2023: a review of how best to support businesses and families from April 2023 is to be set up, to target those most in need and energy efficiency
• New VAT-free shopping scheme for non-UK visitors will not proceed
• The freeze on alcohol duty rates will not proceed.

Further changes and tax increases have not been ruled out.

The Chancellor will address MPs in Parliament this afternoon and we expect the Medium Term Fiscal Plan to be unveiled on 31 October, by which time the Chancellor will have the Office for Budget Responsibility’s forecasts (to be revised again after today’s announcements!).