Government makes U-turn on Mini-budget

On the 23^rd of September, the Chancellor announced the details of the Mini-budget, however, just a few weeks later the government has made a U-turn with regards to corporation tax.

Today, not only has Prime Minister Lizz Truss sacked Chancellor Kwasi Kwarteng but she’s announced that corporation tax will be increasing from 19% to 25% – an idea originally proposed by Rishi Sunak.

This comes just a couple of weeks after the first U-turn regarding the 45% higher tax rate.

Chris Bryce, Freelancer and Contractor Services Association’s (FCSA) Chief Executive, commented, “The reinstatement of CT increases may go some way to steadying the bond markets and reduce the cost of government debt, but the potential downside is that the UK becomes a less attractive place to do business on the world stage at a time when the economy clearly needs as much inward investment as it can get and business alone should not bear the burden of difficult economic times.”

“It’s clear that this U-turn, alongside the earlier U-turn on dropping the 45% tax rate, has been forced upon the Prime Minister by the markets and her own party, but some of the measures previously announced could have been beneficial in overall terms. That the decision to U-turn has been made so quickly is concerning and destabilising – policy should not be made on the hoof and the old saying ‘act in haste, repent at leisure’ clearly applies.”

Hearing that PM was to reverse the Mini-budget, those in the self-employed sector were concerned that the government might not go ahead with its proposal to simplify the IR35 legislation.

Chris added, “That Ms Truss did not mention the IR35 rollback this afternoon is cautiously welcome but, of course we may not have heard the last of this matter.

“The Prime Minister is well versed in the controversies surrounding IR35. However, the previously promised review, if carried out properly, will give the government the opportunity to finally hear what the whole industry has been saying since 1999 – IR35 is fundamentally flawed and is a huge anti-competitive sledgehammer used to crack a very small nut.

“As always I, and FCSA stand ready to work with Jeremey Hunt, the new Chancellor, Edward Argar, the new Chief Secretary to the Treasury, and other ministers towards ensuring finding fully compliant, practical and workable solutions to the issues surrounding contracting and the whole temporary labour market in the UK.”

To find out more about contracting please contact Jaime on 01442 795 100 or email jaime.thorpe@dolanaccountancy.com.