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Truss makes U-turn on Corporation Tax promise
Julian Ball | Legal Director
Friday 14th Oct, 2022
"To those waiting with bated breath for that favourite media catchphrase, the U-turn, I have only this to say, ‘You turn if you want; the lady’s not for turning." - Margaret Thatcher
No doubt Prime Minister Liz Truss hoped she would be able to repeat the words of her hero but the sheer weight of opinion from the Bank of England to the IMF to her own party has forced a rethink on her flagship policies due to the markets not being ready for such radical ideas.
Corporation Tax will now rise to 25% this spring as originally scheduled by Rishi Sunak and will not remain at 19%.
Ms Truss is sticking to her other policies including the National Insurance cut plans, the income tax basic rate cut by 1p from April 2023 and we had previously been told that the proposed abolition of the Additional Rate of Income Tax of 45% had been ditched.
As things currently stand the IR35 repeal is still due to go ahead however there is speculation that the government’s position on this is also being reviewed. So we will all have to watch this space to see how this develops but hopefully we will get clarity sooner rather than later.
Kwasi Kwarteng has paid the price for the unpopular mini-budget as Jeremy Hunt takes over as Chancellor. It remains to be seen as to whether Liz Truss can distance herself sufficiently to survive particularly since she has effectively linked her fiscal credibility to the approval of the financial markets (which don’t look like rebounding anytime soon). The country will no doubt wait anxiously to see what will happen when the new Chancellor delivers his medium -term fiscal plan at the end of the month which will, of course, reflect the scrutiny of the Office of Budget Responsibility (OBR) perspective.
Related article - An IR35 update following the mini-budget
There are already incorrect interpretations/rumours being circulated which we hope to clear up in this article by answering the questions we have been asked.