What does the new Chancellor mean for your finances?

It is rare for a Chancellor to have misjudged the mood of the country so badly that his tenure is measured in weeks. 

Kwasi Kwarteng had some exciting ideas in his September mini-budget. Unfortunately, the markets saw them as rather too exciting. Financial crisis, followed by the departure of Mr Kwarteng were the results.

His replacement, Jeremy Hunt wasted no time in outlining his plans on the Monday after his Friday appointment, and not surprisingly, tore up most of his predecessor’s measures.

In a statement lasting a little over five minutes, the new Chancellor scrapped almost all of the Kwarteng mini-budget tax cuts. The scale of the reversals went further than many had predicted.

Personal Tax

The new Chancellor had already warned of difficult decisions ahead, suggesting that taxes will go up.

Chancellor Kwarteng had already been forced to ditch the proposal to cut 45% top rate tax for the highest earners before his departure.

Chancellor Hunt went further and scrapped the planned 1p cut to income tax promised by the Government.

The decision in the mini budget to reverse the 1.25% rise in National Insurance will go ahead as originally planned.

Getting rid of the plans to lower the basic rate to 19pc will mean that a person who earns £20,000 a year would pay £1,486 a year in tax, which is £74 more than under Mr Kwarteng’s plans. Someone who earns £50,000 a year would pay £7,486 in income tax, or £374 more.

It could be time to review your tax position – and if you are a top rate payer, to look at ways to reduce the tax you pay.

Household budgets 

A two-year freeze on the energy price cap – the flagship policy for the now ex-Prime Minister Liz Truss – will now only last until April next year rather than October 2024. 

Mr Hunt confirmed the current freeze would only last until April next year to protect the taxpayer from volatility in the energy markets. 

Prior to the Prime Minister’s introduction of the energy price guarantee, the energy price cap, set by regulator Ofgem, would have seen the average household energy bill increase to over £3,500 a year.  

If your household budget is stretched, you might need some expert help to get it under control.


Mr Hunt also scrapped plans to cut dividend tax rates, in a move which will hit investors. 

In April this year, rates went up 1.25%. It means basic rate payers now pay 8.75% tax on dividends, up from 7.5%, higher-rate payers will pay 33.75%, up from 32.5%, while top-rate payers will pay 39.35% up from 38.1%.

These rate increases were due to be scrapped in the next year, but will now stay where they are.

It came three days after Ms Truss scrapped plans to stop corporation tax from rising from 19% to 25% next April. 

As an investor, getting help with your tax position is even more important than ever.


Self-employed contractors and freelancers were celebrating when Mr. Kwarteng scrapped the hated “IR35” tax rules which led to contractors being treated as employees for tax purposes and in some cases have been shunned by businesses to avoid complex tax commitments. 

The celebrations stopped abruptly when Mr Hunt announced the rules would remain. 

Getting help with your tax position is vital if you are self employed.

House buyers

Mr Kwarteng doubled the stamp duty tax-free band from £125,000 to £250,000 at the mini-Budget in September and raised the nil-rate band for first-time buyers from £300,000 to £425,000. The change came into force with immediate effect and spares an extra 200,000 home buyers from paying any tax.

Mr Hunt has maintained the recent stamp duty cut, which saves the average buyer in England £2,500 in tax on a home purchase. 

The U-turn on corporation tax could also help bring an end to the gilt market turmoil of the past two weeks. Gilt yields may fall, the pound may strengthen and inflation forecasts may ease.

This may in turn pull back on mortgage rate rises – the mortgage industry is focussed on bonds. Mortgage rates, which rocketed at the fastest pace on record since the mini-budget, should stabilise and could even fall from the 6% level. Lenders will may be able to stop sheltering from the storm and reintroduce lending products – hopefully at more affordable levels.

If you are looking at a mortgage or remortgage, the market is changing daily – make sure you have the latest figures in front of you.


Mr Kwarteng’s minibudget triggered potential disaster for the pensions industry.

Many private sector defined benefit or final salary pension schemes use an investment strategy called “LDI” based on bond investment. The calculations that this complex derivative technique depends on have been thrown into chaos, with falling bond values and skyrocketing yields.

Mr Hunt has been focussed on stabilising the bond market. There is now said to be little real risk that pension providers will collapse, despite the headlines, and compensation will be available if any do. 

There could be trouble ahead. Mr Hunt  pointedly declined to rule out scrapping the pensions triple lock, meaning that the state pension could become even less generous.

However, some people approaching retirement will have seen their funds fall in the past few weeks. If you are close to retirement, then seek financial advice.


There could be good news for savers. Experts believe banks could stabilise savings rates if the new Chancellor pursues economic policies viewed as less inflationary.

Saving rates for fixed bonds have soared since the mini-budget, as the Government’s economic ­policies – widely viewed as inflationary – ramped up expectations that the Bank of ­England would be pushed to raise the Bank Rate to as high as 5.75%

Competition in the savings market is heating up – you need to ensure your money is in the most rewarding place.

What should you do?

Having a Chancellor with less radical plans for the future of the economy may help calm the outlook now. Markets are already showing signs of calming. But damage may already have been done to many people’s financial plans.

It may be too early to know exactly what this damage may be until the dust settles and Mr Hunt is able to finalise his new policies. But it is not too soon to start repairing it. If you need an expert to look at your investment or pension plans, need to find a mortgage or remortgage that you can afford, or need help with questions of tax, contact us at Continuum right away.

The information contained in this article is based on the opinion of Continuum and does not constitute financial advice, you should seek independent financial advice before embarking on any course of action.

A pension is a long term investment. The fund value may fluctuate and can go down, which would have an impact on the level of pension benefits available. Pension income could also be affected by interest rates at the time benefits are taken.

Your home may be repossessed if you do not keep up repayments on your mortgage.

You may have to pay an early repayment charge to your existing lender if you remortgage.

The Financial Conduct Authority does not regulate taxation advice.

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