Some of the main mini-budget plans that have now been axed include the proposed changes to Income Tax, Corporation Tax, tax reductions on dividends for company directors, and the VAT-free shopping scheme for overseas visitors.
The basic rate of income tax will remain unchanged at 20% instead of being cut to 19% as previously announced.
Hunt also said the Government will review its support energy bills in April 2023. The help on energy bills was previously promised for two years to domestic households and to be reviewed after six months for businesses.
On Friday (October 14) Prime Minister Liz Truss had already announced a u-turn on the previously announced plan to keep corporation tax at 19% rather than raising it to 25% as had been proposed by Kwarteng's predecessor Rishi Sunak.
The £18bn a year cut to National Insurance contributions will remain in place, as will the cut to stamp duty.
On September 23, then Chancellor of the Exchequer Kwasi Kwarteng announced a mini-budget designed to combat the rising cost of living:
The Energy Bill Relief Scheme was confirmed in the precious mini-budget, meaning that businesses including beauty salons will get support for covering the cost of energy. This discount is applied automatically and will take effect from businesses’s October bill, usually received in November. The new announcement did not reverse this measure but did state that it is only guaranteed until April 2023 whereas previously it had been promised to domestic households for longer.
The mini-budget anniunced that the 1.25% rise in NI which was introduced in April to fund health and social care would be reversed from November 6, 2022.
This means that employers will have to contribute less NI for staff, so the cost of employing labour will go down. Employees will have less NI coming out of their wages, and those who are self-employed will pay less NI on their profits.
Changes to NI should come into effect in most people’s November pay packet. The more people earn, the more they will benefit from this change.
This change was not reversed in the October 17 statement and will still go ahead.
The previous chancellor, Rishi Sunak, had announced plans to increase Corporation Tax from 19% to 25% from April 2023. This was scrapped in the September 23 mini budget, with then Chancellor Kwarteng claiming that it would put £19 billion a year back into the economy.
However, Kwarteng's plans were reversed in the October 17 statement by Jeremy Hunt.
The September mini-budget had announced that from April 2023, the basic rate of tax was due to be cut to 19%. Currently, people in England, Wales and Northern Ireland pay 20% tax on income from £12,571 to £50,270.
Kwarteng said this cut will benefit 31 million people with an average £170 a year reduction in tax.
However, the October 17 budget statement from Chancellor Jeremy Hunt reversed this measure, confirming Income Tax will remain at 20%.
The September mini-budget also announced that the 45% additional rate of tax which is paid by people who earn more than £150,000 a year would be abolished in April 2023 but that decision was reversed on October 3.
In addition to the cost-of-living crisis, the beauty and spa industries have been facing a recruitment crisis for some time. The chancellor has announced some measures which may encourage more people to seek employment.
Rules around Universal Credit will be changed, meaning that people’s benefits will be reduced if they don’t fulfil their job search commitments. Around 120,000 people on Universal Credit will be asked to take active steps to seek more work or risk having their benefits reduced.
Kwarteng also announced extra support for unemployed people aged over 50 to help get them into work.
However, there is no guarantee that these measures will attract the skilled and qualified employees required in the beauty and spa industries.
Commenting specifically on the u-turn on Corporation Tax, British Beauty Council chief policy officer Victoria Brownlie said: "This constant flip-flopping makes it impossible for businesses to plan or build contingencies for the year ahead. We need stability.
"If the Government is determined to push ahead with this increase in Corporation Tax, then they must be prepared to extend support on energy bills post-31 March 2023, especially for high energy-using vulnerable businesses like hair salons and spas that cannot simply cut down their use. Otherwise, businesses are faced with an imperfect storm of wage rises, tax increases and a huge jump in energy costs at a time when they’ve barely come up for air since COVID. This will be untenable for many."
"The announcement neglects the reality that shops, salons and other businesses pay people’s wages and upskill workforces. Without them, the Government will be in much greater trouble. If the Prime Minister is serious about growth, her team needs to be working with businesses, particularly small and micro businesses which employ the vast majority of the workforce, to understand how they can achieve this together."
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