Chancellor Delivers Tax Cut Plans
Politics may have been on pause since the death of the Queen but today the new Chancellor Kwasi Kwarteng got to his feet in the Commons to deliver a mini-budget (which the government is describing as a fiscal event) with the focus on tax cuts. A lot of what was in the statement had been previewed in the press but he did confirm that the cap on bankers’ bonuses will be scrapped. He also cancelled the corporation tax increase from 19% to 25%, which he said would give the UK the lowest corporate tax rates in the G20.
He confirmed that the recent rise in National Insurance introduced by his predecessor Rishi Sunak will be reversed from November 6th. He also announced a review of the tax levied on one person businesses, freelancers and contractors – under IR35 rules.
He confirmed that he will cut the basic rate of income tax to 19p in April 2023 – one year early – which he said amounted to a tax cut for 31 million people.
In a surprise move he announced that he would scrap the top rate of income tax – paid by those who earn more than £150,000 a year from 45p to 40p. He also confirmed an immediate cut to stamp duty – with no duty paid up to £250,000 and for first time buyers nothing to pay up to £425,000.
It was billed as a mini- budget but there were a number of announcements including confirming that there will be Vat-free shopping for overseas visitors and planned rises of duties on alcohol will be cancelled.
Although it was described as a mini-budget it was, according to the Institute for Fiscal Studies, the biggest tax cutting event in 50 years The Chancellor argues that the policies announced today will help boost economic growth. He will have to hope his gamble pays off as his statement came just after the Bank of England warned the UK is already in recession.