Autumn Budget 2022 – the shortest-lived tax cut

They say a week is a long time in politics and indeed, that would seem very true.

It was only ten days ago that we were taken aback by the major announcements contained in the mini budget – since then we have seen the pound fall and then rise again; the Bank of England step in to secure the future of our pension funds; interest rates rise; mortgage offers being pulled; and some inner turmoil within the Government.

And the result of all this? Well, it was some backtracking with the cancellation of the announced abolishment of the additional tax rate!

So, where does that leave us now? To some extent, we are back to where we started – an income tax rate of 45% on earned and savings income over £150,000. However, the reversal of the national insurance rise does mean that we still have a reduction in the top rate of income tax on dividends, bringing it back to 38.1%, where it was before 6 April 2022.

Whether this is the end of the excitement, only time will tell. We have firm suggestions that the long-awaited forecast from the Office for Budget Responsibility will be released later this month and another fiscal event being accelerated too, which is likely to set out significant cuts to public spending. What impact will either of these will have upon the UK economy? Only time will tell.

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