As part of the plan to tackle the cost of living crisis, the Government announced that it would cut the basic rate of income tax from 20p to 19p, which is paid on incomes between £12,750 and £50,270. The Government will also remove the 45 per cent rate for the UK’s richest earners, who are paid over £150,000.
From November 6, the levy will be removed, but the higher threshold for paying national insurance will remain.
This week, Mr Kwarteng unveiled his small budget in the hope of delivering billions of pounds worth of tax cuts.
It comes as Prime Minister Liz Truss tries to boost the country’s faltering economic growth.
The small changes to the budget will affect people differently depending on the annual salary they earn.
By including your annual salary, you can find out how much income tax and national insurance you will pay; and how much you will save next year, by using our budget calculator.
Click here to find out how much you can save.
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The Chancellor announced the moves with the intention of boosting the economy in the much anticipated “fiscal event” on Friday morning.
Mr Kwarteng told MPs that the proposed rise to corporation tax would be canceled as he announced that the cap on bankers’ bonuses would be removed.
He also announced that the basic rate of income tax would be cut to 19p in the pound from April 2023.
The 45 percent higher income tax rate will also be “abolished”, he said.
Not everyone has welcomed the plans as some critics have pointed out that the wealthiest members of society will be left even better off by the tax cuts.
Economists from the Institute for Fiscal Studies warned that almost half of the new Chancellor’s £45 billion cuts will go to the top five per cent of earners.
Professor Jo Maugham said: “Liz Truss’ budget means that those earning a million a year will have an extra £54,400 in their pockets after tax and NIC. For those earning £25,000, the equivalent figure is around £280.
“Hard to imagine a worse response to a cost of living crisis.”