The Growth Plan – Dramatic Changes
On 14 October, Chancellor Kwasi Kwarteng was displaced as Chancellor of the Exchequer amid intense speculation that Prime Minister Liz Truss is about to renounce key parts of the economic plan as stipulated in the Mini Budget announced last month. Today’s events mark further U-turns announced by the Government; the most notable of which is regarding corporation tax.
To help you keep appraised with these changes amongst the Government’s political turmoil, please find key announcements summarised below.
A New Chancellor
Jeremy Hunt replaced Kwasi Kwarteng as Chancellor, making him the fourth Chancellor in as many months.
Chris Philp, the Chief Secretary to the Treasury, was also sacked. He was replaced by Ed Argar, formerly the Paymaster General and Minister to the Cabinet Office.
Corporation Tax Reversal
At a press conference (the House of Commons was not sitting), the Prime Minister announced that the planned reversal of the increase to corporation tax would not go ahead. The rise from April 2023 to a main rate of 25%, with reduced rates for companies with profits below £250,000, was legislated for in the Finance Act 2021.
31 October remains the date when the Medium-Term Fiscal Plan will be announced. The Prime Minister said that the £18bn tax savings from the corporation tax reversal was a ‘down payment’ on this strategy. That still leaves a shortfall of about £24bn in 2026/27 stemming from September’s announcement. Spending, said Liz Truss, would grow ‘less rapidly than previously planned’.
Timetable of Reversals
Today’s announcements were the culmination of a series of statements and retractions over the last few weeks:
- On 26 September the previous Chancellor, Kwasi Kwarteng issued an ‘Update on Growth Plan Implementation’ revealing that his Medium-Term Fiscal Plan would be presented on 23 November, alongside a forecast from the Office for Budget Responsibility (OBR).
- The planned abolition of the 45% tax rate announced in September’s ‘mini-Budget’ survived just ten days before being reversed on 3 October.
- Seven days later, on 10 October, the Treasury announced that the Chancellor would bring forward the announcement of his Medium-Term Fiscal Plan from 23 November to 31 October. This last date for the calendar is one of the surviving elements of Kwasi Kwarteng’s planning which Jeremy Hunt will now take forward.
WHA is always happy to guide you through how these changes might impact you and your business, so please call us for further insight.
As always, the WHA team is committed to updating you with the latest announcements and changes implemented as the Government disclosures are released.