The cut in income tax and stamp duty, the tax paid by those who buy real estate, was announced today by the Chancellor.
Although the government declined to call his speech a budget, researchers said his measures amounted to “the biggest tax cut since Nigel Lawson’s 1988 budget”. In our quick guide to the mini-Budget, we explain the effects of its measures on your finances.
The additional rate of income tax of 45 pc. is deleted. The top rate of income tax is therefore 40 pc.
The basic income tax rate will be cut from 20 percent to 19 percent next year, twelve months ahead of schedule.
However, these changes will not apply to Wales and Scotland, where the additional rate remains and is currently 46 percent.
The chancellor promised to put tax simplification at the heart of government. “We will review the tax system to make it simpler and fairer,” he said. “We will anchor tax simplification in government,” he added, so the Office of Tax Simplification will be abolished.
The government had already confirmed it would roll back the 1.5 percentage point increase in National Insurance Rates introduced by Mr. Kwarteng’s predecessor, Rishi Sunak.
“We are cutting the stamp duty,” the chancellor said. The tax-free bracket will be doubled from £125,000 to £250,000. It will be £425,000 for new buyers. He said 200,000 people would not pay stamp duty as a result. They are all permanent changes and come into effect today.
He also promised to reform the hated “IR35” self-employment tax rules, which could lead to them being taxed as if they were employees. Reforms to the system introduced in 2017 and last year will be dropped.
The increase in tax rates on dividend income, which is related to the increase in national insurance contributions, will also be reversed. The omitted corporate tax hikes also mean that investors who own stocks like more of the profits made by the companies they invest in.
Investors will have the opportunity to put money into more specialized funds by removing a fee cap for certain schemes.
Low corporate tax rates also benefit landlords who own real estate through limited liability companies.
The chancellor said unemployed people over 50 would receive additional help, although he did not provide details.
Obligation to drink
The link with inflation is broken.
Working mothers applying for benefits
Those who work part-time and claim Universal Credit will be forced to work more hours or risk having their benefits cut. Mothers are especially likely to be affected.