‘The Growth Plan’ – a summary of the mini-budget amendment

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Last updated: November 7, 2022

After writing our blog post following the September 2022 'Mini Budget', we weren't expecting to write another in October amending most of the points raised…

On Monday 17th October, the (new) Chancellor, Jeremy Hunt, made a statement “bringing forward measures from the Medium-Term Fiscal Plan”. He announced what amounts to a near-total unwinding of Kwasi Kwarteng’s ‘fiscal event’ of 23rd September.

There is a lot being said in the news at present, so for clarity, I have summarised the areas which may affect your financial affairs below. (There were some additional measures such as no freeze on alcohol duty which I’ve not covered in this post for simplicity.)

The key measures revoked were:

  • The cut to 19% in the basic rate of tax (outside Scotland) from 2023/24 will not take place. Instead, the basic rate will remain at 20% “indefinitely”, meaning that even Rishi Sunak’s 2024/25 scheduled timing has been dropped.
  • The 1.25% reduction in dividend tax rates, due from 2023/24, will be scrapped.
  • Prior to the statement on Monday, the government had already reversed the planned 45% Income Tax cut.
  • In addition, they announced the plan to continue with, rather than delay the previously legislated Corporation Tax increases from April 2023. Therefore, the rise in the rates of corporation tax from 19% to 25% from April 2023 will now go ahead.
  • The off-payroll working rules in the public and private sectors (often referred to as IR35) will remain in place, reversing their removal at the start of the next tax year.

The Energy Price Guarantee (EPG) is now to be reviewed:

This was due to cap average domestic bills at £2,500 a year for two years from the start of October, it will now be scaled back to last only until April 2023. In the meantime, the Treasury will design “a new approach that will cost the taxpayer significantly less than planned whilst ensuring enough support for those in need”. Any support for businesses from April 2023 “will be targeted to those most affected”.

The government did, however, keep some measures in place as follows:

  • The reduction in National Insurance contributions will go ahead. The additional 1.25% which was added to the rates of NI for 2022/23 for employees, employers, and the self-employed will be removed from November 2022.
  • The stamp duty land tax cuts that took effect on 23 September will not be reversed. Therefore, the SDLT (stamp duty) threshold will be doubled so that no tax will be due on purchases of residential property up to £250,000 in England and Northern Ireland.
  • This relief is extended to first-time buyers who will pay no tax on purchases less than £425,000 (up from £300,000).

In summary:

Since the initial ‘mini-statement’ markets have been volatile as expected and there is still a lot in the press surrounding the Prime Minister and what might happen next.

Further changes to fiscal policy to put the public finances on a sustainable footing will be announced on 31st October 2022 alongside the publication of the Office for Budget Responsibility’s Economic and Fiscal Outlook. We will continue to update you with any announcements made.

We pride ourselves on having a robust investment approach and always stress test your financial plan. If you’re feeling nervous, would like some additional information, or if you're unsure as to how these changes might affect you, please do not hesitate to contact us.

This content is for information purposes and should not be treated as financial advice. We would always recommend speaking to a professional before making decisions regarding your wealth.

Please note that the FCA does not regulate will writing, tax planning, and trusts.