The chancellor of the exchequer has scrapped almost all of the economic measures in the "mini" Budget less than a month after they were introduced by his predecessor.
In a speech this morning (October 17), chancellor Jeremy Hunt said the Treasury will reverse “almost all the tax measures” of the “mini” Budget that have not started parliamentary legislation.
The government will therefore no longer proceed with cuts to dividend tax rates, the reversal of IR35 reforms, the VAT-free shopping scheme for non-UK visitors and the freeze on alcohol duty rates.
The chancellor said these changes will raise £32bn a year.
Fiscal statements are normally given in the Houses of Parliament first, however Hunt said he had agreed with the speaker to give a brief summary of these to the country to “reduce unhelpful speculation” and to give “confidence and stability” to the UK.
The energy price guarantee, which had previously been announced as a cap on the price per unit of energy for two years, will remain until April next year.
Hunt said: “The prime minister and I have agreed that beyond that it would not be responsible to expose public finances to unlimited volatility in international gas prices.”
Instead, he launched a Treasury-led review into how best to support energy bills while costing the taxpayer less than originally planned.
“The most important objective for our country right now is stability,” Hunt said as he committed to drop debt as a share of the economy in the medium-term.
The IR35 reforms were introduced in April 2021 to the private sector, and means that the responsibility for assessing whether a contractor is self-employed or employed is now with the end client, and not the contractor themselves.
The liability, and therefore financial risk, was also transferred to the fee-paying party.
The controversy surrounding the changes prompted the former chancellor, Sajid Javid, to pledge a review of IR35 as part of the Conservative party’s manifesto in the lead up to the general election.
Hunt’s predecessor, Kwasi Kwarteng, pledged to repeal the reforms last month, however they will now remain as they were.
The chief executive of IR35 specialist Qdos said the reform of the tax changes has left the sector “lost for words”.
Seb Maley said: “IR35 reform damages the flexibility of the UK labour market, which is key to economic growth.
“Many contractors left the sector after risk-averse businesses stopped engaging them. Repealing reform would have opened the floodgates – a catalyst for the recovery of this sector.”
Dave Chaplin, CEO of tax compliance firm IR35 Shield said the government’s initial commitment to repealing the off-payroll rules was a sensible initiative.
“Whilst we agree that tax avoidance measures are sensible, the off-payroll rules over-extended, causing genuinely self-employed contractors to lose their rights to being their own boss.