Kwasi Kwarteng has unveiled a series of tax cuttings measures, as he said the Conservative government that has been in power since 2010 was ushering in a “new era”.
The statement was not technically a full budget, instead it was branded a fiscal event or mini-budget. But it was far from mini.
Here are the key announcements from chancellor:
Income tax cut for the richest
The top rate of tax will be cut for the highest earners, with the 45% rate on earnings over £150,000 scrapped. Instead the top rate be the 40% that applies to earnings over £50,271.
It will benefit 629,000 earners on higher salaries – saving them on average £10,000 a year.
National insurance rise axed
The increase in national insurance will be reversed from November 6.
The 1.25 percentage point increase in the tax – which only came into force in April – was announced by former chancellor Rishi Sunak to help fund health and social care.
But the tax cut will benefit the poorest by just 63p a month, according to the Institute for Fiscal Studies. By contrast, the respected think-tank said the move would be worth around £150 a month to higher earners.
The current income tax rates – the top rate will be axed
Basic income tax rate cut early
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 this would be one year earlier, in April 2023. He said this would mean a tax cut for over 31m people.
Corporation tax rise axed
The planned increase of corporation tax to 25% will be cancelled. It will stay at 19% – meaning businesses will pay less tax than they had been expecting.
Bankers’ bonus cap cut
In the wake of the 2008 financial crisis, bankers’ bonuses were limited to twice a banker’s salary. This will be axed. Kwarteng argued that all the bonus cap did was “push up the basic salaries of bankers, or drive activity outside Europe”.
Stamp duty cut
The level at which house-buyers begin to pay stamp duty has doubled from £125,000 to £250,000. First time buyers currently pay no stamp duty on the first £300,000 and that threshold has been increased to £425,000.
The country has been hit with strikes in recent months – with more expected – amid disputes over low pay during a cost of living crisis.
Kwarteng said strike action “disrupting” lives was “unacceptable” and signaled a crackdown what was coming. Under his plans unions will have to put any pay offers to a member vote “to ensure strikes can only be called once negotiations have genuinely broken down”.