The new Chancellor has reversed almost all of the tax measures set out in the Government’s controversial mini-budget from three weeks ago.

The Chancellor said the scrap on most of the mini-budget policies was designed to calm financial turmoil

The much-anticipated move follows the departure of Kwasi Kwarteng last Friday and means a number of tax policies will no longer be taken forward after the pound crashed to an all-time low against the US dollar.

The basic rate of income tax will now remain at 20% “indefinitely” instead of falling to 19% from April 2023. The Government said it “aims to proceed with the cut in due course” but only when economic conditions allow for it and a change is affordable.

The cap on energy prices under the Energy Price Guarantee has now been cut back to six months rather than two years, after which it will be reviewed and potentially targeted at the least well-off.

The VAT-free shopping scheme for non-UK visitors to Great Britain is also being abandoned, among other measures such as the freeze on alcohol duty rates, payroll working reforms and cuts to dividend tax.

This follows on from the previously announced decisions not to proceed with the proposals to remove the additional rate of income tax and to cancel the planned increase in the corporation tax rate.

Taken together, these changes are estimated to be worth around £32bn a year.

However, the cuts to stamp duty and National Insurance remain in place.

Chancellor Jeremy Hunt said the move was designed to calm financial turmoil following the mini-budget.

Commenting on the cull, Kersten Muller, managing director with tax advisor Alvarez & Marsal Taxand LLP, said: “The Chancellor’s decision to scrap nearly all the tax cuts announced in the mini-budget is centred around restoring the Government’s economic credibility. By limiting the energy price guarantee to six months, followed by a more targeted approach, the Chancellor also appears to signal that he expects the better-off to contribute more.

“Beyond aiming to deliver economic stability for UK businesses, there was little in today’s statement about encouraging companies to invest more in Britain. Whilst the planned scrapping of the “off-payroll working rules” will not go ahead any longer, a review of the system is still needed to ensure businesses and individuals can comply with its requirements.”

A full Budget is due on 31 October and Muller said, “businesses will be expecting more from the new Chancellor to assuage their concerns about the deteriorating economic situation”.

Meanwhile, the CEO of deVere Group, one of the world’s largest independent financial advisory organisations, said today’s measures seemed to have reassured the markets for now.

Nigel Green added: “The pound gained and gilt yields dropped as the new Chancellor set out his emergency measures aimed at stabilising the extremely choppy waters of the last couple of weeks.

“However, we expect that the new measures to calm financial markets will only work temporarily. The massive loss of credibility cannot be regained all that rapidly. U-turns and abandoning landmark economic policy after economic policy does not inspire investor confidence and trust. Rather it smacks of humiliating economic incompetence.

“Now investors are sensing that Liz Truss faces a leadership challenge within days as her own colleagues, who are worried about losing their seats, plot how to remove the Prime Minister and replace her with another senior Tory. The Prime Minister is on course to be the UK’s shortest-serving leader in history – and this all creates further uncertainty which will be translated into heightened market volatility.”