This morning, Jeremy Hunt has scrapped nearly all tax cuts announced in last month’s mini-budget, which include removing a proposed cut to corporation tax and a deferred 1p cut to income tax
Hunt, who replaced Kwasi Kwarteng as Chancellor on Friday, brought forward his fiscal statement by two weeks in an attempt to stabilise the markets.
In his statement this morning, Hunt declared the reversal of the proposed £45bn of unfunded tax cuts to a new total of £32bn.
The 1p cut to income tax is to be delayed ‘indefinitely’ until the UK’s finances improve – instead of being introduced in April 2023.
In addition, the energy price guarantee will only extend until April, not for two years as originally planned.
Hunt said: ‘The government has today decided to make further changes to the mini-budget and to reduce the unhelpful speculation about what they are, we’ve decided to announce these ahead of the medium-term fiscal plan, which happens in two weeks.’
Hunt said that the government will be reversing ‘almost all’ the tax measures announced in the growth plan that has not yet started parliamentary legislation.
These changes include no cuts to dividend tax rates, a repeal of IR35 reforms for off-payroll working rules introduced in 2017 and 2021, no new VAT-free shopping scheme for overseas visitors, and no freeze on alcohol duty rates.
He also announced the basic rate of income tax to remain at 20%, not to be reduced to 19% from April 2023.
Hunt warned that there will be ‘more difficult decisions’ ahead on tax and spending, reminding all government departments to ‘redouble their efforts’ to find savings and cut on some areas of spending.
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