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Hunt’s mini-Budget U-turn: What you need to know

Updated 22 November 2023

5min read

Craig Rickman
Senior Content Writer

The UK tax system has never been easy to understand. But with the government backtracking on most of its September tax cuts, you might be more confused than ever.

Update: view the latest Autumn 2023 statement here

Here we make sense of what it means for you, your family, and your business

New chancellor Jeremy Hunt’s decision to reverse most of the tax cuts proposed by his predecessor, Kwasi Kwarteng, is the latest twist in a year punctuated by political and economic turmoil. 

Kwarteng resigned on Friday just 38 days into the role after his emergency mini-Budget, dubbed the biggest tax-cutting event in half a century, sparked mayhem in markets.  

The pound fell to its lowest level against the dollar for 37 years, and the average mortgage rate rose above 6 per cent for the first time since 2008 - the year of the global financial crisis. 

In a statement on Monday, in a move to calm markets, Hunt announced Kwarteng’s proposed reforms to income tax, corporation tax, dividend tax, and alcohol duty were all being scrapped. The new chancellor also unveiled significant changes to the energy bill support package, and abolished plans to repeal the highly controversial IR35 reforms. 

With so much upheaval to the tax regime in a short space of time, you can be forgiven for not knowing where you stand – the latest changes will impact individuals, families, and businesses. 

As always, there are winners and losers – let’s find out who these are. 


Income tax 

Many workers will no longer receive a boost to their take-home pay next year as Hunt scrapped plans to cut the basic rate of income tax by 1p. This move is worth around £6 billion a year to the government, according to the Treasury. 

One of Rishi Sunak’s reforms, this was originally due to take effect in April 2024, but Kwarteng moved the timetable forward 12 months.  

Hunt, however, confirmed the basic rate of income tax will remain at 20 per cent indefinitely. “While the government aims to proceed with the cut in due course, this will only take place when economic conditions allow for it and a change is affordable,” the government said.  

This will disadvantage both workers and retirees whose annual income exceeds £12,570. As an example, someone earning £20,000 a year will pay an extra £74 in income tax.

Earlier this month, the government backtracked on its mini-Budget decision to cut the additional rate of income tax from 45p to 40p. This means the existing income tax system will remain unchanged next year; for now, anyway. 

Dividend tax 

Hunt also confirmed that April 2022’s 1.25 percentage points increase to dividend tax is here to stay, adding around £1 billion to the HMRC’s annual tax take. Kwarteng had proposed to reverse this from April next year. 

This means that investors will continue to pay tax at 8.75 per cent, 33.75 per cent and 39.35 per cent on dividends received on investments held outside of tax wrappers. 

The cushion the blow here, it's worth remembering that investors can still earn up at £2,000 a year in dividends without paying any tax.

National insurance 

On a more positive note, the decision to reverse April’s 1.25 percentage point national insurance (NI) hike will go ahead on 6 November as planned, boosting a typical worker’s pay by around £330 a year. Unfortunately, anyone living off retirement income will not benefit from this measure.  

Stamp duty 

Home buyers breathed a sigh of relief as Kwarteng’s stamp duty cut remained untouched. The government estimates this will exempt 200,000 homebuyers every year from paying the tax.  

The threshold where no stamp duty is payable rose from £125,000 to £250,000 in September, saving buyers up to £2,500.  

For first-time buyers, the threshold has increased from £300,000 to £425,000. However, to benefit from the preferential rates you must buy a home for £625,000 or less.  

Small businesses  

Hunt’s reversals are set to cause the greatest pain for small business owners, who will now pay more tax on both profits and dividends from April 2023. 

Corporation tax 

On Friday, Hunt ditched Kwarteng’s decision to freeze corporation tax, with rates now set to increase sharply next year.  

Under the current system, private limited companies pay a flat rate of 19 per cent on all profits. But from 1 April, businesses whose profits exceed £250,000 will pay 25 per cent corporation tax. For those with profits between £50,000 and £250,000 a sliding scale will be applied. This means that a business with annual profits of £250,000 will pay £15,000 extra in corporation tax. 

Dividend tax 

As owner directors of small businesses tend to pay themselves using a combination of salary and dividends, they will also be impacted by Hunt’s decision to reverse the proposed cut to dividend tax. As detailed further up, the current rates are 8.75 per cent, 33.75 per cent and 39.35 per cent for basic, higher, and additional rate taxpayers, respectively. 

National insurance 

The one bright spot for businesses is that those with staff will pay 1.25 percentage points less in employer NI from 6 November, with the current employer rate of 15.05 per cent reverting to 13.80 per cent. Furthermore, Hunt confirmed the 1.25 per cent Health and Social Care Levy will not go ahead next year. 


Freelance workers who operate as private limited companies were dealt a hefty blow as Hunt overturned Kwarteng’s plans to repeal the contentious IR35 rules

IR35 was put into place as part of HMRC's efforts to stop companies and contractors from working together as employers and employees so they could avoid certain taxes, but has led to widespread confusion. 

If you're a freelancer and need further clarification of what this decision means for you, speaking to an accountant can really help. 

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One of the most eye-catching measures was Hunt’s decision to shake up the energy price guarantee. 

Rather than being in place for two years, the new chancellor said the current package, which limits a typical household’s gas and electricity bill to £2,500, will be reviewed from April. There are fears this could result in the average annual energy bill rising to more than £4,300. 

Meanwhile, Kwarteng’s commitment to freeze alcohol duty has also been ditched, pushing up the price of wine, beer, and spirits from February 2023. 

How advice can help

With many aspects of the UK tax system now less favourable than previously planned, you might be looking at ways of protecting your finances from the clutches of HMRC. If you are unsure how to go about this, seeking expert advice can really make a difference.  

Click below to connect with a regulated financial adviser today.

If you found this article useful, you might also find our article on the Autumn statement 2022 informative, too.

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About the author
Craig Rickman is senior content writer at unbiased.co.uk. He has been writing about personal finance and wealth management since 2016, including four years as a journalist at the Financial Times Group. Prior to this, Craig spent eight years working as a regulated financial adviser. He holds the CII level 4 Diploma in Financial Planning.