There were no less than five different combinations of Prime Minister and Chancellor in 2022. We summarise below the key changes introduced by the various pairings last year.
Boris Johnson and Rishi Sunak: Pre-2022 to 5 July
We entered 2022 with the relatively long-established plan to increase corporation tax from 19% to up to 25% in April 2023 and to increase dividend tax by 1.25%.
In the Spring Statement on 23 March, Sunak announced:
- increasing the national insurance contributions (NICs) thresholds to the equivalent of the income tax personal allowance (£12,570) from July 2022;
- reducing the basic rate of income tax to 19% from April 2024; and
- replacing the proposed 1.25% increase in NICs in April 2023 with a "health and social care levy" of the same rate.
Boris Johnson and Nadhim Zahawi: 5 July to 6 September
Zahawi was quick to announce his goal of implementing tax cuts. In the end, his tenure was too brief to successfully implement any such changes.
Liz Truss and Kwasi Kwarteng: 6 September to 14 October
Truss and Kwarteng announced their controversial mini-budget on 23 September, without an OBR forecast, with key proposals of:
- no increase to corporation tax;
- abolition of the 45% income tax rate;
- SDLT cuts by raising the limit to £250,000, and £425,000 for first-time buyers, who would also be eligible for relief on the first £625,000;
- VAT-free shopping for overseas visitors and
- no 1.25% increase in NICs.
Liz Truss and Jeremy Hunt: 14 October to 25 October
Following the economic instability that followed, Hunt replaced Kwarteng, who presented his "medium term fiscal plan" on 23 November – this time will a full OBR forecast. In effect, his plans undid the above changes, other than SDLT cuts (though even those only last until 31 March 2025).
Rishi Sunak and Jeremy Hunt: 25 October to now
The Chancellor remained intact despite the change of Prime Minister. His Autumn Statement on 17 November introduced relatively minor changes, including:
- reducing the 45% income tax rate from £150,000 to £125,140;
- cutting the dividend allowances by half per year for the next two years; and
- maintaining other allowances and thresholds.
If taxpayers were dizzy in March, the rollercoaster hadn't even started. Interestingly, despite the many changes to income tax and corporation tax, inheritance tax remained untouched, at least for now. The next budget is expected on 15 March 2023.