The Chancellor Jeremy Hunt has announced that “almost tax” cuts from Kwasi Kwarteng’s mini budget are to be scrapped which includes the “indefinite” pause to the 1 pence cut in the basic rate of income tax.
The Chancellor has also said that the energy price guarantee for millions of households will now only last up until April 2023.
Hunt said that there will be a review to look into a “new approach” to target families who are worse off from April onward, and he said in a televised briefing the government are committed to helping millions of households over the winter period.
However, he said, “beyond that, it would not be responsible to keep exposing public finances’ to global energy prices.”
The Prime Minister had initially said there will be energy support for two years when she came into office, and the plan was to freeze the average bill at £2,500 a year.
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In an emergency statement, Hunt said on Monday morning, “The biggest single expense in the growth plan was the energy price guarantee.
“This is a landmark policy supporting millions of people through a difficult winter ad today I want to confirm that the support we are providing between now and April next year will not change.”
The Chancellor added, “So I’m announcing today a Treasury-led review into how we support energy bills beyond April next year.
“The objective is to design a new approach that will cost the taxpayer significantly less than planned whilst ensuring enough support for those in need.
“Any support for businesses will be targeted to those most affected and the new approach will better incentivise energy efficiency.”
Speaking of the cut to basic rate of income tax Hunt said, “The government’s current plan is to cut the basic rate income tax to 19% from April 2023.
“It is a deeply held Conservative value, a value that I share that people should keep more of the money they earn.
“But at a time when markets are rightly demanding commitments to sustainable public finances, it is not right to borrow to fund this tax cut.
“So I I’ve decided that the basic rate of income tax will remain at 20% and it will do so indefinitely until economic circumstances allow for it to be cut.”
Speaking over what will remain from Kwarteng’s mini budget, the Chancellor said, “We will reverse almost all the tax measures announced in the growth plan three weeks ago that have not started parliamentary legislation.
“So whilst we will continue with the abolition of the health and social care levy and stamp duty changes, we will no longer be proceeding with the cuts to dividend tax rates, the reverse of payroll working reforms introduced in 2017 and 2021, the new VAT free shopping scheme for non UK visitors, or the freeze on alcohol duty rates.”