Comment as Chancellor takes a step back into the 1980s with focus on tax cuts and looser regulation
Fiscal statement update
Fiscal statement update
Tim Sarson, Head of Tax Policy at KPMG, said:
“New Chancellor Kwasi Kwarteng has delivered a fiscal statement flavoured with a return to the economics of the 1980s aimed at driving economic growth and productivity while tackling a wide range of fiscal, social and economic challenges head on.
“Businesses saw a fiscal statement that felt very different and a clear shift in Government policy. Gone is Sunak’s higher tax approach focused on balancing the books and instead we have a range of measures to try and halt the UK’s languishing growth figures and super-charge its economy.
“The planned rise in Corporation Tax rate has been scrapped in a move that will be welcomed by most businesses and hails a return to low-tax-broad-base approach of George Osborne. The scrapping of the IR35 rules on off payroll working will also be welcomed by easing a significant compliance burden.
“In a surprise move the additional income tax rate of 45 per cent is also to be scrapped, enhancing the Government’s trickle-down approach to try and get the economy moving. Plans to cut the basic rate of income tax are being brought forward a year to 2023.
“It was also interesting to note that the issue of levelling up will now have more of a tax focus, with the announcement of new investment zones which offer a range of tax benefits that look very like a throwback to the enterprise zones of the 2010s.
“This all comes after the Chancellor announced yesterday the planned 1.25 per cent rise will be reversed from 6 November and the levy, due to replace the National Insurance rise as a new standalone tax from April 2023, has been cancelled.
“Overall, this was a fiscal statement that felt very different and showcased a clear change of direction from the new Government.
“While parts were not as radical as predicted, such as no major stamp duty reform and only talk rather than actions on business rates, this was a statement of intent by the new Chancellor.
“It is now left for businesses and the economy in general to see these changes put in place and assess if they provide the boost that is both intended and needed to deliver growth.”
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