Newly appointed Chancellor Jeremy Hunt has today announced the reversal of almost all tax cuts announced by his predecessor except National Insurance (NI).
Speaking this morning (17 October), Mr Hunt confirmed that the previously announced reversal of the National Insurance increase and scrapping of the Health and Social Care Levy will both go ahead.
Former Chancellor Kwasi Kwarteng announced last month that the Health and Social Care Levy, which was due to come into force in April 2023, would be scrapped, and the 1.25% rise in NI would be reversed on 6 November.
Other tax policies planned by Kwarteng – including cutting the basic rate of income tax, cutting dividends tax, and repealing reforms to IR35 – will now not be taken forward.
Although the Government still plans to cut the basic rate of income tax ‘in due course’, a Treasury statement said this would ‘only take place when economic conditions allow for it and a change is affordable’.
Mr Hunt, the former longest-serving health secretary, was named as Chancellor last week after Kwarteng was sacked from the post, following economic turmoil resulting from the tax-cutting mini budget.
The Health and Social Care Levy first came into force in April as a 1.25 percentage point rise to NI to help fund the NHS, health, and social care.
NI was set to return to 2021/22 levels after a year to be replaced by the levy as a separate tax. It was announced by then Prime Minister Boris Johnson in 2021 to help frontline services.
In his statement today, Mr Hunt said that the UK’s public finances ‘must be on a sustainable path into the medium term’.
The Chancellor is expected to announce further changes to fiscal policy on 31 October.