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Mini Budget Brief Jeremy Hunt

Tax Accountant gives his verdict

As promised in last week’s Blog ‘Fantasy Budget’, I promised to give you a rundown of the new measures announced by Chancellor Jeremy Hunt last week, once I’d had the opportunity to study the small print. So here it is:

 Income Tax, National Insurance and IHT
  • The 45% rate of income tax will now start at £125,140 – down from £150,000
  • The allowances and bands for income tax, national insurance and inheritance tax will be frozen until April 2028.
  • Employers’ NIC thresholds to be frozen.
 Dividend Allowance and CGT
  • Dividend tax-free allowance will be reduced from £2,000 to £1,000 next year, and then to £500 from April 2024.
  • Capital Gains Tax Annual Exemption Amount is to reduce from £12,300 to £6,000 from April 2023 and then to £3,000 from April 2024.
 Research and Development
  • For expenditure on or after 1 April 2023 the RDEC rate will increase from 13% to 20%. The SME additional deduction will reduce from 130% to 86% and the SME credit will decrease from 14.5% to 10%.
Business Rates
  • Planned revaluation of properties will go ahead. Additional support will be given, resulting in two-thirds of business not having any increase for next year. This support includes the Multiplier Freeze, the Transitional Relief Schemes, the Retail Hospitality and Leisure Relief and the Supporting Small Businesses Scheme.
  • VAT registration threshold will be held at £85,000.
  • The Government will not be pursuing the Online Sales Tax (OST).
 National Living Wage
  • £10.42/hr from 01 April 2023.
Windfall Tax
  • Windfall tax affecting oil and gas industry to increase from 25% to 35% and an electricity generator tax set at 45%.
Energy Price Guarantee
  • The price cap will increase from April 2023 to bring the average cost of energy for a typical house to £3,000 per year for a typical household.
Benefits and Welfare
  • To increase by 10.1% next year.
  • Pensions triple lock to be protected.
  • Pension credit to increase by 10.1%.


Mini Budget Brief: Stability and fiscal credibility

This time around, Kwasi Kwarteng’s headlong rush for growth at any cost was ditched for a strategy of stability and fiscal credibility, which the markets have clearly shown a thumbs up to with long-term interest rates dropping and the pound showing a modest recovery. As the most significant tax-raising measure was an increase on the oil and gas industry windfall tax and hitting electricity generators with a whopping 45% tax, the Chancellor rather spiked the guns of the opposition.

Mini Budget Brief: Has the Chancellor done enough?

In the short-term the answer is, probably. The markets are happy, the pensioners and benefit recipients are happy that both are going up by the rate of inflation. Middle and higher earners, however, were just grateful that the hit on their earnings wasn’t as bad as many had forecast.

The glaring omission of course, was that non-doms have kept their undeserved tax breaks, plus Mr Hunt failed to announce any tax simplification measures, such as unifying of income tax and CGT rates and, unless I failed to spot it in the small print, bankers’ bonuses are no longer subject to restrictions.

Tax Accountant’s view

Overall, the Autumn Statement was about stabilising the economy, halting the ever-increasing black hole in the country’s finances and keeping the markets happy, which keeps the interest UKplc pays on its debt lower. It is not, however a long-term strategy for growth and could easily be derailed if the Ukraine war drags on, with the knock-on effect of continued high prices for energy.

If you would like more detailed information on any of the above measures, either email or telephone 01743 271071 and we will be pleased to advise further.