October Emergency Statement: What does it mean for dentists?
NewsPosted by: Dental Design 18th October 2022
This emergency statement came out of the blue on Monday morning as the new Chancellor Jeremy Hunt sought to reassure financial markets after the panic prompted by his predecessor’s mini-budget.
He moved to lay out more details of the Government’s new economic strategy in an effort to boost its credibility and provide some stability.
This came days after a policy U-turn on Corporation Tax, which will now increase from 19% to 25% in April next year after all.
This was first announced in 2021, but Kwasi Kwarteng reversed the plan in September, before being overruled by the PM last week.
Today the new Chancellor announced he would cancel the planned cut to the basic rate of income tax from 20p to 19p, which was due to happen in April 2023.
And he overturned the repeal IR35 off-payroll working rules announced by Kwasi Kwarteng.
These rules are designed to make sure dental associates pay broadly the same Income Tax and National Insurance contributions as employees.
Today’s announcement means the responsibility for determining their employment status stays with the contractor, and the associated administrative burden.
There were changes to the Energy Price Guarantee too, which limits the price that suppliers can charge.
It means an average annual household bill will not rise above £2,500 and was initially put in place for two years, with a six-month package for businesses and public sector organisations, including dental practices, that would halve bills.
Both measures will now be scaled back from April next year, though targeted support for the most vulnerable households and businesses will continue.
One of the only policies to have survived from the mini-budget is the cancelation of a planned 1.25% rise in National Insurance from 12% to 13.25%, which was to happen in November.
The cuts to Stamp Duty announced in September also survived; from November no stamp duty will be paid on the first £250,000 of a property, up from £125,000, and for first-time buyers the threshold will rise from £300,000 to £425,00.
That was a move to get the housing market moving, though the Bank of England is widely expected to hike interest rates again on November 3, which will push up borrowing costs and, combined with the cost-of-living crisis, is likely to hit demand for homes.
Ominously, the Chancellor signed off from his emergency statement by promising ‘more difficult decisions on tax and spending’ and warned ‘some areas of spending will need to be cut’.
Linda Wallace, Director of Wesleyan Financial Services, said in response: “Today’s emergency statement represents a bonfire of the controversial economic policies announced just weeks ago. The reversal of the planned Corporation Tax cut snatches away a 6% saving on business profits, which would have helped to mitigate against rising operational costs. At a time when we can confidently predict more interest rate increases piling further pressure on households and inflation at a record high, it’s going to be a tough winter for many.
“We know that people are accessing savings and pensions to cover expenses, which can have a significant impact on future retirement plans. That’s storing up problems for the future, so I’d urge anyone struggling to get financial advice.”
