In a radical package of tax cuts, Chancellor Kwasi Kwarteng has brought forward a cut to the basic rate of income tax cut, slashed National Insurance contributions and abolished the additional rate of income tax.
Mr Kwarteng announced in his mini-Budget today that the 1pc cut to the basic rate of income tax – first announced by former Chancellor Rishi Sunak – will be brought forward by one year.
This means that from April 2023, basic-rate taxpayers will pay 19pc in income tax, down from 20pc. According to Mr Kwarteng this works out as an average tax saving of £170 next year for 31 million people.
The additional rate of income tax – 45pc for workers earning £150,000 or more – has also been abolished. Anyone earning over £50,271 will pay the higher rate of 40pc after the change kicks in in April 2023.
The National Insurance hike introduced by Boris Johnson's government will also be reversed from November 6, with workers seeing the benefits in their payslips that month.
Ahead of his mini-Budget, Mr Kwarteng confirmed that he was cancelling the 1.25 percentage point increase imposed by Rishi Sunak to pay for social care and dealing with the NHS backlog.
Mr Kwarteng said he would also be scrapping the planned Health and Social Care Levy which was due to come into effect next April and raise around £13bn a year.
The Treasury said most employees will receive a cut to their national insurance contribution directly via their employer's payroll in their November pay, although some may be delayed to December or January.
The Chancellor also has lifted 200,000 people out of paying tax on buying property in a radical overhaul of the stamp duty system.
With immediate effect the Government has increased the threshold above which stamp duty must be paid on the purchase of residential properties in England and Northern Ireland from £125,000 to £250,000. There was also a boost for first-time buyers.
The threshold at which first-time buyers begin to pay duty will increase from £300,000 to £425,000, and the maximum value of a property on which first-time buyers relief can be claimed will also increase, from £500,000 to £625,000.
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