In response to the current cost of living crisis and UK recession, on Friday Chancellor of the Exchequer Kwasi Kwarteng announced the September 'mini budget' - a detailed outline of the government's imminent economic spending plans.
Kwarteng, who was recently appointed the new Chancellor by Prime Minister Liz Truss, has revealed a shake-up to income tax and a permanent stamp duty cut, in addition to major tax cuts for people and businesses.
The mini budget, introduced specifically to tackle the current economic upheaval, comes ahead of the two traditional financial announcements a year - the Autumn Budget, typically shared in October or November, and the Spring Statement, in March.
Following Kwarteng's announcement, we've outlined the biggest takeaways from his statement, which include the government's plan to combat inflation and cut taxes for economic growth.
Here's a summary of key points from the September mini budget announcement:
There will be a cut in the basic rate of income tax from 20% to 19% from April 2023, which was initially planned for 2024 by former Chancellor of the Exchequer, Rishi Sunak.
Individuals in England, Wales and Northern Ireland currently pay 20% on any annual earning (between £12,571 to £50,270), and the government has estimated the cut will mean 31 million people will get to take home £170 a year more.
The 45% top rate of income tax will be axed and for England, Wales and Northern Ireland taxpayers and, instead, there will be a single high rate of 40% from April 2023.
The recent 1.25% rise in National Insurance will be reversed from November 6, and the government will scrap a planned levy to fund health and social care - it will now come from general taxation.
Sunak introduced the rise in April, but Truss pledged to change it. Workers and employers have so far paid an extra 1.25p since April.
A UK-wide rise in corporation tax, due to increase from 19% to 25% in April 2023, will be cancelled.
Sunak previously said it was 'fair and necessary' for businesses to contribute to the economic recovery, but revealed a 'small profits rate' to help small firms, and extra tax breaks to accelerate investment.
Access to Universal Credit has been tightened, which means people's benefits will be reduced if they don't meet job search requirements.
Approximately 120,000 more people on Universal Credit will be asked to be more proactive at finding work or face their benefits being reduced. Meanwhile, jobseekers aged over 50 will be afforded more time, with work coaches to help them resume work.
Work and investment
Rules regarding IR35 - which control off-payroll working - will be simplified.
IR35 was first unveiled in 1999 but the change that came about April 2021 forced businesses in the UK - both medium and large - to determine the tax status of their contractors and freelancers. Previously, this was outlined by such workers themselves.
The amount companies can invest tax-free, however, remains at £1m, indefinitely. Pensions funds can increase UK investments too.
Start-up companies can raise as much as £250,000 via schemes giving tax relief to investors, and share possibilities for employees have doubled from £30,000 to £60,000.
A cut to Stamp Duty, which is paid when people buy a property in England and Northern Ireland, means nothing will need to be paid on the first £250,000, rising to £425,000 for first-time buyers. This comes into force today.
The government claims 200,000 more people can forget stamp duty altogether.
People's energy bills will freeze, which the government believe will reduce inflation by 5% points.
Overseas visitors are to benefit from VAT-free shopping, and intended increases in the duties on beer, for cider, for wine, and for spirits will be cancelled.
Reactions to the September mini budget announcement
Since the mini budget announcement, many - including politicians and members of the public - have shared their thoughts in Parliament and on social media, with some convinced that the new measures disproportionally benefit the elite.
Here's some of the most poignant reactions to the mini budget announcement:
— Lisa Nandy (@lisanandy) September 23, 2022
Our thoughts on the #MiniBudget
💰This is a budget for the rich
😓Working people will suffer
🚫Literally nobody voted for this
— Good Law Project (@GoodLawProject) September 23, 2022
.@mrjamesob rebukes Kwasi Kwarteng's mini-budget:
'If the scales don't fall from your eyes today they never will... they think you are so pathetic that they are going to give people like me more money and have you believe that they are actually helping you.' pic.twitter.com/nRWjI6jlA9
— LBC (@LBC) September 23, 2022
— Parody Prime Minister (@Parody_PM) September 23, 2022
That was vile from @KwasiKwarteng who actually just said "for too long in this country we've indulged in a fight over redistribution"
Dealing with inequality is somehow over-generous? Does he think people choose to be poor & face disadvantage? Disgusting#MiniBudget
— Caroline Lucas (@CarolineLucas) September 23, 2022
The government is:
Making it easier for City bankers to help themselves.
Making it harder for workers to win better pay and conditions.#MiniBudget
— Frances O'Grady (@FrancesOGrady) September 23, 2022
The poorest have always been concerned that the richest were paying too much tax & not receiving bigger bonuses, whilst on the way to the food bank#MiniBudget
— nazir afzal (@nazirafzal) September 23, 2022
Brief synopsis of that #MiniBudget
For the rich: Pay less tax, earn more in bonuses, generally get richer
For the poor: Have your benefits cut, lose union rights, generally be worse off
— Liam Thorp (@LiamThorpECHO) September 23, 2022
This #MiniBudget embeds unfairness across the UK.
The UK Government should be offering meaningful support to those who need it the most. Instead, they’re giving tax cuts to the rich, bonuses to bankers and protecting the eye-watering profits of energy companies.
— Mark Drakeford (@PrifWeinidog) September 23, 2022
— John Rowland (@JohnRow64286327) September 23, 2022
For more information about the September mini budget, click here.
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