Last month we brought you up to date with the mini budget and what that meant for workers. Well, now that’s all out of the window and as of 17 October we have a new budget, known as the emergency budget, which was presented by the new chancellor of the exchequer Jeremy Hunt.
So what’s changed and what does the latest announcement mean for workers in the UK?
Income tax
The planned fall in the basic rate of income tax (from 20% to 19%) which would have saved an average of £170 per year for those paying the basic rate has been scrapped. Jeremy Hunt said the basic rate will remain at 20% ‘indefinitely’.
In the September mini budget, previous chancellor Kwasi Kwarteng announced he was scrapping the highest rate of tax - 45% for people earning more than £150,000. However, this was the first of his policies to fall by the wayside when prime minister Liz Truss announced the 45% top rate of income tax was remaining as it was on 3 October.
National Insurance
This is one of the announcements from the original mini budget which still stands. The 1.25% rise introduced in April 2022 will be reversed on 6 November which will save the average worker £330 a year.
The Health and Social Care Levy, which had been due to be introduced in April 2023 remains off the cards as per the September mini budget.
IR35
The changes that had been announced to the 2017 and 2021 reforms to the IR35 tax legislation have been scrapped. This means it will be the responsibility of the business to get the employment status right of a self-employed person, not the person themselves.
Bankers’ bonuses
The plan to lift the cap on bankers’ bonuses is one of the few mini-budget policies that is still in place.
Stamp duty
The stamp duty policy also remains as it was in the September mini budget: you’ll pay no stamp duty on the first £250,000 value of a house, or the first £425,000 if you’re a first-time buyer.
Other changes
In the September mini budget, planned increases in the duty rates for beer, cider, wine, sparkling wine and spirits were cancelled but these have now been reinstated.
The government’s Energy Price Guarantee - which limits the amount suppliers can charge for each unit of energy - was originally put in place for two years but now it is only in place for six months. This means that in April 2023 this cap could rise again. The average annual bill is currently £2,500, last winter it was £1,277.
