Chancellor Kwasi Kwarteng has announced a cut in income tax as part of measures aimed at boosting the economy.
The basic rate of income tax will fall from 20p to 19p in the pound from April 2023. As a result, 31 million people will be better off by an average of £170 per year.
In a move benefiting the 629,000 people in the UK who earn more than £150,000 a year, the 45% higher rate of income tax is to be abolished. Instead, they will pay income tax at 40%, a rate that applies to those earning over £50,271.
The government will also reverse the recent rise in National Insurance from 6 November, saving money for businesses as well as workers, and cancel the planned rise in corporation tax from 19% to 25%.
In other changes, stamp duty is to be cut immediately, with nothing to pay on the first £250,000 of property’s value — double the current amount allowed. For first-time buyers, the threshold is rising to £425,000.
Household bills are expected to be cut by £1,000 this year with the energy price guarantee and £400 grant. The most vulnerable households will receive additional payments, taking their total savings this year to £2,200.
Planned increases in the duty on beer, cider, wine and spirits are cancelled.
And in a controversial move, rules which limit bankers’ bonuses will be scrapped as part of efforts to “reaffirm” the UK’s status as a financial services hub.
Shadow chancellor Rachel Reeves said the mini-budget was “based on an outdated ideology that says if we simply reward those who are already wealthy, the whole of society will benefit”.
