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Tax repercussions of mini-Budget wipe-out

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In an “as you were” statement, Chancellor Jeremy Hunt reversed all of the tax changes made by Kwasi Kwarteng that had not already been implemented or legislated for.

18th Oct 2022
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Certainty and stability were the watchwords of Hunt’s un-Budget statement, which was designed to calm the markets, and reduce unhelpful speculation ahead of his medium-term fiscal plan due to be announced on 31 October. 

For individuals 

Hunt made it clear that the following personal tax measures are staying put:

  • The basic rate of income tax will be set at 20% indefinitely, or until economic circumstances allow for a cut.
  • The health and social care levy will not be introduced as planned from April 2023. 
  • Dividend tax will not be cut by 1.25 percentage points from April 2023, so those tax rises on dividend income which came in from 6 April 2022, will remain in place.
  • The additional rate of income tax is fixed at 45%.

National insurance contribution (NIC) rates will revert to those that were in place on 5 April 2022, as the 1.25 percentage cut has already been programmed into payroll software to apply from 6 November 2022. This means that the artificial alignment of the 1.25 percentage point increase in both NIC rates and dividend tax is broken. It made no sense when Chancellor Sunak introduced it, so it made little sense to reduce tax on dividends just because the NIC on salaries was being cut.

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Replies (19)

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By Hugo Fair
18th Oct 2022 16:05

From an individual's perspective (as opposed to purely an accounting one), it's not quite “as you were” as reported everywhere.

Whilst true that JH reversed "all of the tax changes made by Kwasi Kwarteng that had not already been implemented or legislated for", he has also severely curtailed the duration (and hence stability) of the Energy Bill Relief scheme.
And with the demand for cutting costs hovering, it's exactly those areas that might've tackled the energy problem from the other end (support for insulation etc) that are now coming under further attack.

Whether morally justified or politically wise, all this merely delays for a very few months a decision on what will happen in April ... so is a massive gamble hardly commensurate with his mantra of 'certainty and stability'!

I assume he's aware of the detailed planning in backrooms of Whitehall where they are modelling types & impacts of mass civil disorder during the forthcoming Winter & Spring?

Thanks (7)
Replying to Hugo Fair:
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By mkowl
19th Oct 2022 09:51

We should put down our calculators and join in

End MTD for ITSA today as a niche protest

Thanks (14)
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By FD-HBC
19th Oct 2022 10:01

"However, the off-payroll rules do not apply for contractors working for small engagers in the private sector".
I may be acting a bit dim here but what is the definition for "engager" ? Is this the Umbrella company, the Referring Agency or the end user ?

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Replying to FD-HBC:
Head of woman
By Rebecca Cave
19th Oct 2022 10:20

The engager is the end user. The guidance refers to this body as 'the client'.
https://assets.publishing.service.gov.uk/government/uploads/system/uploa...

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By AndrewV12
19th Oct 2022 10:50

Ah the mini budget was simply a storm in a teacup after all.

Yer all right be gentle with me.

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By Red1960
19th Oct 2022 11:05

Not a criticism of you Rebecca, as I'm sure you appreciate but more of a general observation.

"Certainty and stability were the watchwords of Hunt’s un-Budget statement"

Well we've already had... "strong & stable" and let's be honest that hardly worked out well. Did it?

Hunt is clearly not up to the job and we all know that he never was. If ever anyone defines the expression it is him as Chancellor.

Anyone remember all those hospital corridors well that's what's about to happen to our economy.

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Replying to Red1960:
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By johnjenkins
19th Oct 2022 11:34

He's relying on Blackrock to take over.

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Replying to johnjenkins:
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By Red1960
19th Oct 2022 13:28

Note: they already have.

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By philaccountant
19th Oct 2022 11:25

We now live in an economic and political system based on our government's wishful thinking:

Hopefully it won't be too cold and hospitals will cope this winter.
Hopefully we'll secure enough gas and the energy system won't collapse.
Hopefully gas prices will stabilise and inflation will return to normal.
Hopefully when you call an ambulance it will arrive.

And if things go wrong at least they did their best so don't blame them - blame the last government, even though they were from the same party.

This country is becoming a basket case under this stewardship. Highest tax burden in the G7 and all we have to show for it are crumbling public services and the lowest inward investment.

Thanks (6)
Replying to philaccountant:
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By tedbuck
19th Oct 2022 12:57

The whole of Government is in denial about the real question which isn't how much tax to raise but rather how to cut expenditure.
The NHS sacred cow gets worse and worse and now covers up the deaths of babies it fails and how many people do you know who go into hospital and come out with Covid? GPs are hardly the patients' friend these days (not all, I know, but certainly mine) and the bill for negligence in The NHS is many billions which the taxpayer foots. Rarely do you see an NHS employee getting the blame. Bit different from the real world.
HMRC is about as effective a tax collector as a drunken sailor and MTD is effectively an admission that 'we don't know what we are doing so we'll get computers to do it for us.' I have three cases now where HMRC is in denial about errors they have made which result in HMRC 'not getting the right amount of tax'.
Sounds familiar - that expression doesn't it? About £5,000 in each case but who cares HMRC don't even respond.
The stamp duty office has just informed me that they are now dealing with correspondence for the 4th August so it may be a while before they get back to me but no doubt penalties would apply if I were that late in sending stuff in.
And so on.
The Civil Service is a shambles - Gordon Brown invented jobs to get people off the dole but the jobs weren't real and effectively were a double burden on the country. They were made for make believe work and to justify their wages the 'workers' had to invent lots of rules to waste everybody's time in the real world. Hence the lack of productivity. And now these *****rs in Parliament are suggesting a four day week with no reduction in salary. Great idea and when all the businesses go bust who will meet the bill? It won't be the *****rs in Parliament it will be the taxpayer so we might as well invite Vlad over now because that's where it will lead us in the end. Not me as I shall be pushing up the daisies but the rest of the workers will be paying 90% tax and good luck to you.
I don't know about a niche revolt against MTD it needs a big revolt against the Civil Service and its supposed overlords - the Politicians.
I mean - can you imagine putting the new Chancellor in charge of anything? Absolutely barmy. As for the BofE much of the problem is due to their incompetence in not putting up the interest rates ages ago which would have steadied the housing market and inflation and got the world back to reality.
Grrrrhhh!

Thanks (4)
Replying to tedbuck:
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By johnjenkins
19th Oct 2022 13:32

I watched PMQ's today 19/10/22 and I really don't think Sir Kier wants the job. He's more or less been handed the job to him on a plate. Maybe he realises there's more to the economic crisis than meets the eye. By taking Blackrock on board JH has ensured temporary stability. So Liz will just become a "puppet on a string". I wonder who she has been singing it to.

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By norstar
19th Oct 2022 11:58

I wouldn't read too much into it Rebecca. Hunt's first job was to stablise the markets and Government borrowing costs. To do that, he had to bin everything that wasn't already legislated from the first statement.

The real test will be what he announces after 31st October after it's all been costed and scrutinised. Perhaps a relaxation of tax thresholds etc.

Don't judge based on this reversal - judge what comes next.

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Replying to norstar:
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By johnjenkins
19th Oct 2022 12:19

As I said before he will be relying on what Blackrock wants to do.

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LL
By RickyRoark
19th Oct 2022 14:09

Daily reminder - Taxation is theft.

Any arguments about how the state spends our money should be treated with the disdain it deserves.

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Replying to RickyRoark:
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By johnjenkins
19th Oct 2022 14:12

Or Taxation is obtaining by deception.

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By Mr J Andrews
19th Oct 2022 14:39

The calls for a U Turn on MTD appear greater than ever. Surely if Osborne's wet dream goes ahead it will be the final coffin nail for Truss or whoever's name comes out of the hat when she's gone.
I do wonder if Kwarteng -now Hunt - and Truss even knew about this brainless concept. But here's a tip and way out for Jeremy : Announce, as a further measure of saving on quarterly household Energy charges , that the Govt. has decided to scrap MTD for good.

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Replying to Mr J Andrews:
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By Jo Nokes
19th Oct 2022 17:54

Why on earth would they know about it?

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Replying to Mr J Andrews:
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By Jo Nokes
19th Oct 2022 23:54

edited

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Replying to Jo Nokes:
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By johnjenkins
20th Oct 2022 09:42

Join the censored brigade Jo.

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