The Chancellor unveiled a new wave of economic measures being introduced by the government in the House of Commons today.
Kwasi Kwarteng claimed the government will take “difficult decisions” to drive up economic growth as he announced his mini-budget.
He told MPs: “As a Government, we will focus on growth – even where that means taking difficult decisions. None of this is going to happen overnight.
Read more: LIVE Kwasi Kwarteng unveils major tax cuts and stamp duty hikes in mini budget - updates
“But today we are publishing our growth plan that sets out a new approach for this new era, built around three priorities: reforming the supply-side of the economy, maintaining responsible approach to public finances, and cutting taxes to boost growth.”
Mr Kwarteng said the Government will set out its fiscal approach more fully in future and the Office for Budget Responsibility will publish an economic and fiscal forecast before the end of the year, with a second to follow in the new year.
Here's how the government's financial plan announcements may affect you.
Income tax cut
The basic rate of income tax will be cut to 19p a year earlier than previously planned from April 2023. Furthermore, the 45 per cent higher rate will be "abolished" and replaced with a single higher rate of 40 per cent.
The government claims that this removes the UK's position as having top rate tax when compared to other countries such as Norway, USA, and Italy while helping to attract a more innovative workforce. However, what this actually means for workers is that less money will be taken out of your personal income and other income sources.
Mr Kwarteng told MPs:" I'm not going to cut the additional rate of tax today. I’m going to abolish it altogether.
“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.
“And, Mr Speaker, after all, this only returns us to the same top rate we had for 20 years – including the entire time the Opposition was last in power – bar one month.”
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.”
Stamp duty
The government will cut stamp duty land tax, increasing the limit to £250,000 - or £425,000 for first-time buyers. If you are looking to enter the property ladder and buy a property, it means you will pay less tax on more expensive properties.
However, some financial experts have warned that a stamp fuel duty cut could see a rise in house prices and an increase in monthly mortgage costs due to the increased demands for a home in an already dwindling market.
Health and social care levy cut
The Chancellor confirmed that the health and social care levy introduced by Boris Jonson's government would be completely scrapped. Speaking to the House of Commons, Mr Kwarten said: "It is an important principle that people should keep more of the money they earn. It is a 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.” He added that other planned rises in national insurance contributions would be cancelled from "the earliest possible moment".
Initially, the Health and Social Care levy would have increased National Insurance contributions for employees below the State Pension age. Now, employees will no longer pay a 1.25 percentage point increase in National Insurance rates.
Alcohol duty rise cancelled
Mr Kwarteng also announced that the government will freeze alcohol duty for another year with promises that reforms will be made to 'modernise' alcohol - plans which the government will announce in the future. However, what it means for consumers is that you won't pay as much for alcholic drinks at the shop as you may have otherwise.
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