Chancellor of the Exchequer Kwasi Kwarteng has announced a raft of changes designed to boost the economy and put more money back into the pockets of people across the country. Mr Kwarteng gave an emergency mini-Budget on Friday in a bid to help people through the cost of living crisis this winter.
Here is everything he announced:
Income Tax
Mr Kwarteng said he is cutting the basic rate of income tax from 20p to 19p in the pound from the start of next year. That means 31 million people will take home more pay in their wage packet.
Mr Kwarteng added: “I can announce today that we will cut the basic rate of income tax to 19p in April 2023 – one year early.
“That means a tax cut for over 31 million people in just a few months’ time. This means we will have one of the most competitive and pro-growth income tax systems in the world.”
The 45% higher rate of income tax will be “abolished”, the Chancellor has announced - a measure that will help higher earners and simplify the tax system. He said: “From April 2023 we will have a single higher rate of income tax of 40%. This will simplify the tax system and make Britain more competitive. It will reward enterprise and work. It will incentivise growth. It will benefit the whole economy and the whole country."
Energy Bills
Chancellor Kwasi Kwarteng told MPs that the Government is cutting household energy bills by an expected £1,400 this year while millions of the most vulnerable households will receive additional payments, taking their total savings this year to £2,200.
The Government’s energy package will cost £60billion for the six months from October, the Chancellor said. That includes the new price cap, the £400 refund and support for vulnerable people.
National Insurance
The Chancellor confirmed to MPs that the health and social care levy introduced by Boris Johnson’s government - an increase in National Insurance we all pay in our wages - would be cancelled.
Kwasi Kwarteng said: “It is an important principle that people should keep more of the money they earn. It is good policy to boost the incentives for work and enterprise.
“Yesterday, we introduced a Bill that means the Health and Social Care Levy will not begin next year. It will be cancelled.”
The Chancellor said this, and other planned rises in national insurance contributions, would be cancelled from “the earliest possible moment”, November 6.
Stamp Duty
Chancellor Kwasi Kwarteng said he is cutting stamp duty in England, taking 200,000 people out of paying it altogether. He said: "Home ownership is the most common route for people to own an asset, giving them a stake in the success of our economy and society.
“So, to support growth, increase confidence and help families aspiring to own their own home, I can announce that we are cutting stamp duty. In the current system, there is no stamp duty to pay on the first £125,000 of a property’s value. We are doubling that – to £250,000.”
Mr Kwarteng also said the stamp duty threshold for first-time buyers would be increased from £300,000 to £425,000.
He added: “We’re going to increase the value of the property on which first-time buyers can claim relief, from £500,000 to £625,000.
“The steps we’ve taken today mean 200,000 more people will be taken out of paying stamp duty altogether. This is a permanent cut to stamp duty, effective from today.”
Alcohol duty
Mr Kwarteng also announced that planned alcohol duty rises would be cancelled.
The Chancellor said: “Our drive to modernise also extends to alcohol duties. I have listened to industry concerns about the ongoing reforms. I will therefore introduce an 18-month transitional measure for wine duty.
“I will also extend draught relief to cover smaller kegs of 20 litres and above, to help smaller breweries. And, at this difficult time, we are not going to let alcohol duty rates rise in line with RPI.
“So I can announce that the planned increases in the duty rates for beer, for cider, for wine, and for spirits will all be cancelled.”
The Chancellor also said that VAT-free shopping would be introduced for overseas visitors.
VAT for tourists
Chancellor Kwasi Kwarteng said he was introducing VAT-free shopping for overseas visitors.
Business taxes
The planned rise to corporation tax has been axed and it will remain at 19%, the Chancellor has told the Commons.
The Government will lift the cap on bankers’ bonuses, Kwasi Kwarteng has told the Commons.
Investment zones
The Chancellor has announced the Government’s plans for new low tax “investment zones”.
Kwasi Kwarteng said: “To support growth right across the country, we need to go further, with targeted action in local areas.
“So, today, I can announce the creation of new investment zones. We will liberalise planning rules in specified agreed sites, releasing land and accelerating development.
“We will cut taxes. For businesses in designated tax sites, for 10 years, there will be: Accelerated tax reliefs for structures and buildings. And 100% tax relief on qualifying investments in plant and machinery.”
He added the Government was in early discussions with regions across England to establish the new zones, as well as the devolved administrations in Scotland, Wales and Northern Ireland.
“If we really want to level up, we have to unleash the power of the private sector,” Mr Kwarteng added.
Action to prevent strikes
The Government will legislate to require trade unions to put pay offers to a member vote so strikes can only be called once negotiations have fully broken down, the Chancellor said. Mr Kwarteng said it is “simply unacceptable” for strike action to disrupt lives, telling MPs the Government will seek to introduce minimum service levels before adding: “We will legislate to require unions to put pay offers to a member vote to ensure strikes can only be called once negotiations have genuinely broken down.”
Mr Kwarteng said he would “accelerate reforms” to the pension charge cap so it will no longer apply to “well-designed performance fees”.
Infrastructure projects
Kwasi Kwarteng said that the Government was “publishing a list of infrastructure projects that will be prioritised for acceleration, in sectors like transport, energy and telecoms”.
He added: “To increase housing supply and enable forthcoming planning reforms, we will also increase the disposal of surplus Government land to build new homes. We are getting out of the way to get Britain building.”
