Tax cuts
The chancellor announced a number of measures in his ‘new growth plan’ to reduce taxes, including:
- Reducing income tax by 1p in the pound from April 2023 – a year earlier than planned, taking the basic tax rate down to 19 per cent.
- Abolishing the top rate of tax – 45 per cent for earnings over £150,000 from April 2023. In its place will be a single higher rate of income tax of 40 per cent.
- Introducing ‘Investment Zones’ in 38 areas including Tees Valley, South Yorkshire and the West of England. Within these zones, taxes for business will be cut for 10 years. There will be no stamp duty to pay on newly occupied business premises and no business rates whatsoever. If a business hires a new employee in the tax zone, then on the first £50,000 they earn, the employer will pay no National Insurance.
- April’s National Insurance hike is to be reversed from 6 November, which the Government said would save money for businesses and 28 million workers.
Benefits
The chancellor also confirmed plans to make part-time workers receiving universal credit increase their working hours and earn more, focusing on employees over the age of 50.
Under the new rule, benefit claimants working up to 15 hours a week will be required to ‘take steps’ to increase their earnings or face having their benefits reduced. This is an increase from the current threshold of 12 working hours a week.
The further increase is expected to be implemented from January, with reports suggesting it will impact around 120,000 people out of about 5.5 million claiming the benefit.
Other measures announced include:
- Putting in place legislation against unions carrying out strike action. Similar to other countries, the Government will introduce legislation to ensure minimum services continue during strikes.
- Stamp duty to be cut from today. Nothing will be paid for the first £250,000 of a property’s value – double that currently allowed. The threshold for first-time buyers is to be increased from £300,000 to £425,000.
- Household bills to be cut by an expected £1,400 this year with aid from the energy price guarantee and £400 grant.
- The removal of the bankers’ bonus cap.
- Planned rise to Corporation tax is scrapped.
Chancellor Kwasi Kwarteng, said, 'Economic growth isn’t some academic term with no connection to the real world. It means more jobs, higher pay and more money to fund public services, like schools and the NHS.
'This will not happen overnight but the tax cuts and reforms I’ve announced today – the biggest package in generations – send a clear signal that growth is our priority.
‘We want businesses to invest in the UK, we want the brightest and the best to work here and we want better living standards for everyone.’
'The Conservatives are the cost-of- living crisis and our country cannot afford them any more'
Responding to the Mini-Budget, the shadow chancellor, Labour’s Rachel Reeves accused the Government of becoming ‘more and more detached from reality’ as millions of people lie awake at night worried about how they will make ends meet.
She also criticised the fact that it was taking place with no independent forecast from the Office for Budget Responsibility.
Reeves said, ‘The chancellor has made clear who his priorities are today - not a plan for growth, a plan to reward the already wealthy. A return to the trickle-down of the past, back to the future, not a brave new era.
‘If you are a pensioner worried about the cost of living, a working family seeing your mortgage rate going up, a small business whose costs are spiralling, the Government’s announcements today do little to reassure them.
‘The Conservative party is actively working against hard-working families.
‘The Conservatives cannot solve the cost-of-living crisis. The Conservatives are the cost-of-living crisis and our country cannot afford them any more.’
Sarah Olney, the Liberal Democrat's Treasury spokeswoman, echoed her comments. She said, ‘This statement was an admission of failure from a Conservative Government that is totally out of touch with the British people. It is not a plan, but a recipe for disaster that will leave families suffering from soaring prices while banks and oil and gas companies rake in huge profits.’
