Mini-Budget: Kwasi Kwarteng announces cut in stamp duty
We use your sign-up to provide content in ways you’ve consented to and to improve our understanding of you. This may include adverts from us and 3rd parties based on our understanding. You can unsubscribe at any time. More info
Chancellor Kwasi Kwarteng unveiled a package of tax cuts worth £45bn as he set out his plan to boost economic growth.
Not since the ‘Barber Budget’ in 1972 when then Chancellor Anthony Barber slashed taxes by the equivalent of around two per cent of GDP has so much money been given back to ordinary people.
Here is a look at how the new policies are likely to affect you.
- Home movers
Permanent cuts to stamp duty in England and Northern Ireland could encourage more people on or up the property ladder.
The “nil rate” stamp duty band will be doubled from £125,000 to £250,000.
First-time buyers will pay no stamp duty up to £425,000. First-time buyers will be able to access the relief when they buy a property costing less than £625,000 rather than the previous £500,000.
The measures will reduce stamp duty bills for all movers by up to £2,500, with first-time buyers able to access up to £8,750 in relief.
Workers will see more money in their pay-packets after a 1p cut to the basic rate of income tax will take place a year earlier than planned.
From April 2023, the basic rate of income tax will be cut from 20 per cent to 19 per cent and will mean 31m people will be better off by an average of £170 per year.
The additional rate of tax will also be abolished from April 2023.
Also from April 2023, there will be a single higher rate of income tax of 40 per cent, rather than 45 per cent on annual income above £150,000.
It means that all annual income above £50,270 will be taxed at 40 per cent.
- National Insurance
The 1.25 percentage point rise in national insurance contributions, which took effect in April, will also be reversed from November. This means 28 million people across the UK will keep an extra £330 a year, on average, in 2023/24.
Those who would have otherwise been additional rate taxpayers will from April 2023 benefit from a tax-free personal savings allowance of £500, in line with higher rate taxpayers.
There could also be a dash for higher earners to pile money into their pensions while they can still get relief at 45 per cent on the cost of saving for their retirement.
- Energy bill payers
The Government has previously confirmed the energy price guarantee, which will reduce the unit cost of electricity and gas so that a typical household in Britain pays, on average, around £2,500 a year on their energy bill, for the next two years, from October 1.
The £400 energy bills support scheme will be paid across Britain in six monthly instalments from October, with additional support for particularly vulnerable households.
Together, the price guarantee and support scheme will save the typical household at least £1,400 for the next year compared with the October 2022 price cap.
Plans include legislation to force trade unions to put pay offers to a member vote so strikes can only be called once negotiations have fully broken down.
Universal Credit claimants who earn less than the equivalent of 15 hours a week at National Living Wage will be required to meet regularly with their work coach and take active steps to increase their earnings or face having their benefits reduced.
This change is expected to bring an additional 120,000 people into the more intensive work search regime, according to ministers.
To support working families, the Government also said it will bring forward reforms to improve access to affordable, flexible childcare.
Older workers aged 50-plus will be given extra time with jobcentre work coaches, to help them return to the jobs market.
Rising economic inactivity in the over-50s is contributing to shortages in the jobs market, driving up inflation and limiting growth, the Government said.
The Government has said that scrapping a cap on bankers’ bonuses will encourage global banks to create jobs and invest, but critics argue it will see the return of a “culture of greed”.
- Alcohol drinkers
Alcohol duty will be frozen from February 2023.
The tax cut will save the consumer 7p on a pint of beer, 4p on a pint of cider, 38p on a bottle of wine, and £1.35 on a bottle of spirits.
Some freelance workers will once again have to ensure they are paying the right tax by figuring out their employment status themselves.
From next April, the Chancellor said that he would rip up IR35 changes from 2017 and 2021 which transferred this responsibility to employers when a person provided services through their own company or other intermediary.
Source: Read Full Article