The Government has scrapped plans to cut the top rate of income tax - which would have meant the very richest got even richer.
Chancellor Kwasi Kwarteng announced plans to aboilish the 45p rate of income tax in his mini-Budget on September 27 .
His original plans meant someone earning over £150,000 a year would have paid 40p per pound they earn, not 45p.
This would have helped just 660,000 people by savivng them an average of £10,000 a year each.
His plans would have cost the Treasury £2billion in the first year alone.
But the Chancellor dropped these plans today following national outrage.
But Kwarteng also wants to cut the basic rate of income tax too, by 1p - and these plans are unchanged.
You start to pay tax on your earnings above a certain threshold.
At the moment this is 20p in the pound, but this will drop to 19p from April 2023.
Currently, if you earn up to £12,750 you pay no income tax.
Everything you earn between £12,571 and £50,270 is taxed at 20% - that's called the 'basic rate'.
Earnings between £50,271 and £150,000 are taxed at 40%, the 'higher rate'.
The top tax rate is called the 'additional rate', and is 45% of everything you earn over £150,000 a year.
This is how the new income tax regime affects your money for the tax year from next April.
I earn £20,000 a year
You will pay £74.30 less a year in income tax from next April.
I earn £30,000 a year
You will pay £174.30 less.
I earn £50,000 a year
On this salary you will save £374.30 in income tax.
I earn £100,000 a year
You only save slightly more - £377 a year.
I earn £150,000 a year
People on this salary will also save around £377 a year.
I earn £200,000 a year
Under the Chancellor's original plans to cut the 45p tax rate, people earning this salary would have saved a whopping £2,841 a year in income tax from next April.
But the U-turn unveiled today means people earning this much will now save around £2,244.45.
They will benefit from the 1p cut to basic income tax, but will still pay 45p on every £1 they earn over £150,000.
Yesterday, Prime Minister Liz Truss told the BBC : "It is part of an overall package of making our tax system simpler and lower."
And Chancellor Kwasi Kwarteng was due to tell the Tory conference this evening in his keynote speech: "We must stay the course. I am confident our plan is the right one."
But today Mr Kwarteng admitted “we saw people’s reactions” and the 45p tax cut “was drowning out a strong package of intervention".
He tweeted: "It is clear that the abolition of the 45p tax rate has become a distraction from our overriding mission to tackle the challenges facing the country. As a result, I'm announcing we are not proceeding with the abolition of the 45p tax rate. We get it, and we have listened."
Ms Truss tweeted: "We get it and we have listened. The abolition of the 45pc rate had become a distraction from our mission to get Britain moving. Our focus now is on building a high growth economy that funds world-class public services, boosts wages, and creates opportunities across the country."
