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Within his Mini Budget speech, Chancellor Kwasi Kwarteng outlined his vision for a ‘new era for Britain’ which will focus on driving economic growth.
The Mini Budget is unique in that it was not accompanied by the publication of an economic forecast by the Office for Budget Responsibility (OBR). According to reports, the Treasury received a draft forecast from the OBR but refused to publish the document.
The Chancellor used the speech to announce a new Growth Plan with the ‘biggest package of tax cuts in generations’.
Commenting on the Growth Plan, the Chancellor said: ‘The tax cuts and reforms I’ve announced… – 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 Chancellor has brought forward by a year the cut in the basic rate of income tax to 19% from April 2023
The cut has been made one year earlier than planned with 31m people getting on average £170 more per year from the new tax year from 6 April 2023.
This measure is set to cost the Exchequer £5bn a year.
At the same time, the 45% additional rate of income tax will be removed so that top earners taking home more than £150,000 will now pay 40% on earnings above £50,271.
He also announced that the recent rise in National Insurance(NI) will be reversed from 6 November. Workers and employers have paid an extra 1.25p in the pound since April.
The rise in Corporation Tax which was due to be increased from 19% to 25% in April 2023 has been cancelled.
The rules for Universal Credit will be tightened, meaning benefits will be reduced if people do not fulfil job search commitments. Around 120,000 more people in receipt of Universal Credit will be required to take steps to seek more work, or face benefits being reduced.
Stamp Duty has been cut with immediate effect. From today there will be no stamp duty paid in England and Northern Ireland on the first £250,000,for first time buyers this rises to £425,000. The value of the property on which first time buyers can claim relief has also increased from £500,000 to £625,000. The government claims that this will take 200,000 more people out of paying stamp duty altogether.
There will be a four-year transition period for Gift Aid relief to maintain the income tax basic rate relief at 20% until April 2027. This will support almost 70,000 charities and is worth over £300m.
The Chancellor also announced that the rules which limit bankers bonuses are to be scrapped and a package of regulatory reforms to be set out later in the autumn
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