Kwasi Kwarteng has unveiled a series of tax cut measures, as he says the Conservative government, which has been in power since 2010, is ushering in a “new era”.
The statement was not technically a full budget, instead it was called a financial event or mini-budget. But it was away From mini
Here are the Chancellor’s key announcements:
Income tax cuts for the richest
The top rate of tax will be cut for the highest earners, with a 45% rate on earnings over £150,000. Instead the top rate is 40% which applies to earnings over £50,271.
This will benefit 629,000 earners on higher wages – saving them an average of £10,000 a year.
National Insurance increased
The increase in National Insurance will be withdrawn from November 6.
The 1.25 percentage point rise in tax – which only came into effect in April – was announced by former chancellor Rishi Sunak to help fund health and social care.
But according to the Institute for Fiscal Studies, the tax cuts would only benefit the poorest by 63p a month. By contrast, the respected think-tank said the move would cost higher earners around £150 a month.
The rate of basic income tax should be cut soon
Boris Johnson – when Prime Minister – promised to cut the basic rate of income tax from 20p to 19p in the pound before the end of this parliament in 2024.
Kwarteng announced today that it will happen a year earlier, in April 2023. He said this would mean tax cuts for more than 31 million people.
Corporation tax has been increased
Plans to raise corporation tax to 25% will be scrapped. It will remain at 19% – meaning businesses will pay less tax than they expected.
Bankers bonus cap cut
In the wake of the 2008 financial crisis, bankers’ bonuses were capped at twice a banker’s salary. It will be dismissed. Kwarteng argued that the entire bonus cap was to “increase the basic salaries of bankers, or drive activity out of Europe”.
Reduction in stamp duty
The level at which home-buyers start paying stamp duty has doubled from £125,000 to £250,000. First time buyers currently pay no stamp duty on the first £300,000 and this threshold has been raised to £425,000.
The country has faced strikes in recent months – with more expected – amid disputes over low pay amid a cost of living crisis.
Kwarteng said the strike action “disrupting” life was “unacceptable” and hinted that a crackdown was coming. Under his plans unions would have to offer any pay to a member vote “to ensure that strikes can only be called when negotiations have truly broken down”.