Harold Wilson once famously said that “a week is a long time in politics!” Well given what has happened with the Government and their hokey cokey tax policies in recent times, truer words have never been spoken (certainly not by a politician anyway!).
The Prime Minister, Liz Truss (or the Human Hand Grenade as she is sometimes known because of her ability to blow things up – Dominic Cummings is often credited with that one apparently), has had more changes of mind than a 6-year-old writing a Christmas list for Santa.
“Kami” Kwasi Kwarteng was ousted last week and replaced by Jeremy Hunt. This was clearly a self-preservation move on the part of The Truss (another nickname for the PM – one she is reported to have used for herself).
Mr Hunt (let’s not use a nickname here) today announced that he is effectively scrapping all the measures announced (& originally endorsed by Radon Liz – yet another nickname, one used by opponents as she is apparently stiff – on issues I presume!).
But we are here to talk about financial planning, not how The Self Preservation Society* in Downing Street have shifted in the wind and might still shift further!
So, today’s announcement means that Dale’s Blog a couple of weeks ago and my blog last week are effectively redundant!
The only meaningful changes that the Government are proceeding with are –
- Cut in NI increases (reversing the 1.25% rise)
- Cut in Stamp Duty (for first time buyers up to £425k & for the first £250k of a property’s value for everyone else)
For more about these changes that are proceeding please read Dale’s Blog – How Might The “Mini Budget” Affect Your Budget?.
By pulling these planned reforms it means that –
- The Basic Rate of Income Tax will remain at 20% (at least that makes our pension calculations a bit easier!)
- The planned cuts to Corporation Tax will not go ahead. That means that if your company makes more than £250k then Corporation Tax will be 25%.
- The repealing of the controversial IR35 legislation is scrapped as well! This is of particular interest to those who were contractors and are now treated as employees.
- The freeze on alcohol duty rates is also scrapped (so that Bailey’s will cost a bit more!)
Some questions that might be being asked may include – how will markets react? Will Sterling stabilise? Will interest rates rise or fall? Will Liz keep her job?
The short answer to these questions is that we don’t know, and we certainly won’t be making any predictions as to what will happen either (not even about Liz keeping her job – who really cares about this one really!).
What we do know is that with the economy things will change constantly. The markets will react, as is human nature (for more please read last week’s blog – I’m from the Future!). We can’t know exactly what will happen and we won’t try and guess either!
The important thing to remember is to stick to the plan.
At the end of The Italian Job, Charlie Croker said “Hold on a minute lads, I’ve got a great idea!”. Our great idea is to remind you to keep calm and do nothing! Call us if you want to talk about things or ever just book some time in our diaries directly.
PS – for a list of nicknames of Prime Ministers please click here
*For those wondering that is the song at the end of The Italian Job