The new Chancellor of the Exchequer has announced a number of changes to the Government’s Growth Plan and Energy Price Guarantee, ahead of the Medium Term Fiscal Statement on 31 October.
A number of planned tax cuts included in the Growth Plan have been reversed. These include:
- Corporation taxes will increase to 25% from 19% in April 2023.
- The cut to the basic rate of income tax from 20% to 19% in April 2023 has been scrapped indefinitely.
- VAT-free shopping for overseas visitors will not go ahead.
- Alcohol duty rates will not be frozen for 2023. The Government will announce further details on how alcohol duty rates will be uprated shortly.
- The higher rate of income tax (45%) will remain in place for those earning more than £150,000 a year.
- The planned increase in the dividend tax of 1.25 percentage points from April 2023 will now go ahead.
- The original 2017 and 2021 off-payroll working reforms (also known as IR35) will go ahead.
Two major tax cuts remain in place:
- The National Insurance rate will be cut by 1.25 percentage points from 6 November.
- The threshold before stamp duty is paid has been raised to £250,000.
The chancellor also announced that the Energy Price Guarantee, which was due to limit the average annual household energy bill to £2,500 for two years, will only provide universal support for six months, until April 2023.
The treasury will review the support provided to businesses and households over the coming months. Forecasts indicate that the energy price cap will increase to around £4,300 for the average household in April 2023 once the Energy Price Guarantee expires.
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