Emergency Budget 2022 expected on Wednesday September 21st

Contractors can expect Emergency Budget 2022 on Wednesday September 14th or Wednesday September 21st.

While the latter date is currently the favourite – partly as a new prime minister won’t take office until September 5th, both dates have been tabled by the Treasury Select Committee.

In a letter asking the Office of Budget Responsibility if its forecasts can be ready for the Emergency Budget of whoever becomes PM, the committee asks about both the 14th and 21st.

'Expected on September 21st'

If the bookies are right and Liz Truss wins the race for Number 10, the expectation is that the foreign secretary will appoint the current business minister, Kwasi Kwarteng, as chancellor.

Kwarteng’s main task at Emergency Budget 2022 will be to deliver Ms Truss’s £30billion-plus in promised tax cuts, part-funded by a reversal in the National Insurance Contributions increase.

The reversal to the in-force increase may apply as early as November but her other big tax cut pledge -- to stop corporation tax rising in 2023 -- will likely be saved for autumn’s Budget.

'Some very difficult financial decisions'

Accounting advisory BDO, which is already totting up potential implications of what it is describing as the “expected” September 21st Emergency Budget, further reflected:

“Whoever the winning candidate of the Tory leadership contest is, they will have to face some very difficult financial decisions on taxes and the cost of living crisis.

“An Emergency Budget is likely to focus on swiftly reducing the burden of spiralling living costs, while trying to stimulate growth.”

'More straightforward'

However, the growth assessments of the Truss camp have suffered a setback in the shape of the OBR’s reply to the Treasury Select Committee.

In a coded refusal to ascribe GDP or any other growth measure from her planned NICs and corporation tax reversals, OBR chair Richard Hughes tells the committee in his letter:

“Where policy announcements involve the reversal of a previously announced measure…it would be more straightforward to reflect its cost and economic impact.”

'Dancing in the dark'

Sam Mitha, former deputy director of central policy at HMRC has less subtly cast Truss’s pledges for economic growth into doubt.

Taking to LinkedIn, Mr Mitha wrote an article opining the “consequences” of the former Treasury secretary’s “tax and economic policies”. He entitled it ‘Dancing in the dark.’

Specifically on Truss’s corporation tax reversal vow, which limited companies with profits of over £50,000 will likely welcome, the ex-HMRC boss (who had responsibility for coordinating the department’s advice to ministers on Budget announcements), condemned:

“Truss’s cancellation of the increase in the rate of corporation tax from 2023 would be inflationary, because it would relieve companies of their anticipated future tax liabilities of some £11.9billion in 2023/24 and £17.2billion in 20225/26.

“The full tax cut will only benefit the proportionately tiny number of companies that earn profits of more than £250,000 a year.”

'Further tax cuts for businesses'

According to BDO corporate tax partner Jon Hickman, cancelling the business tax hike would deprive HMRC from collecting between £15billion and £17billion a year.

Mr Hickman added: “The current chancellor Nadhim Zahawi is preparing proposals on help for businesses with rising energy costs – if Liz Truss is the incoming prime minister, she may decide to adopt any further tax cuts for businesses included in the proposals.

“We do know that she has also promised to remove much of the EU derived ‘red tape’ that inhibits activity as part of her long-term plan for economic growth. Whether this includes a review of the IR35 rules with the aim of sparking a ‘small business and self-employed revolution’ as promised during her leadership campaign remains to be seen. [But] the latest government statement on employment status issues was that ‘now is not the right time’ for reform.”