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Chancellor abolishes top rate of income tax for those earning £150,000 and lifts cap on bankers’ bonuses

23 Sep 2022 4 minute read
Chancellor of the Exchequer Kwasi Kwarteng leaves 11 Downing Street . Picture by Aaron Chown / PA Wire

Kwasi Kwarteng has abolished top rate of income tax for those earning £150,000 and lifted the cap on bankers’ bonuses in his first move as Chancellor.

A planned rise to corporation tax has also been axed and it will remain at 19%, the Chancellor has told the Commons.

Scrapping the top rate of income tax will mean that people on the highest incomes will pay the same rate as those on £50,000.

He added the Government was in early discussions with regions across England to establish the new zones, as well as the devolved administrations in Wales, Scotland and Northern Ireland.

By terming it a “fiscal event” rather than a full budget, Mr Kwarteng avoided the immediate scrutiny and forecasts of the Office for Budget Responsibility.

The package enacting Liz Truss’s tax-cutting promises including reversing the national insurance rise and axing the hike to corporation tax came a day after the Bank of England warned the UK may already be in a recession.

The Government also said it 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.

The pound dropped to a fresh 37-year-low against the dollar as the Chancellor unveiled his “growth plan” for the UK economy.

Sterling declined by 0.89% to 1.115 US dollars, meaning it has shed 17% against the US currency so far this year.

It comes after Bank of England launched another 0.5 percentage point interest rate hike to 2.25% on Thursday and warned the UK could already be in a recession.

Reaction

Consumer money expert Martin Lewis described the Government’s financial plan as “staggering” after the so-called mini-budget from Chancellor Kwasi Kwarteng was announced.

Lewis, founder of Money Saving Expert, tweeted: “That really was quite a staggering statement from a Conservative Party government.

“Huge new borrowing at the same time as cutting taxes.

“It’s all aimed at growing the economy. I really hope it works. I really worry what happens if it doesn’t.”

The Chancellor’s mini-budget amounts to an “admission of 12 years of economic failure”, shadow chancellor Rachel Reeves has said.

Shadow chancellor Rachel Reeves said: “The Chancellor has made clear who his priorities are today – not a plan for growth, a plan to reward the already wealthy. A return to the trickle-down of the past, back to the future, not a brave new era.”

Ms Reeves earlier said the evidence shows low rates of corporation tax are “not the best way to boost investment and productivity”, adding Labour would use targeted investment allowances and scrap “outdated and unfair business rates that harm our high streets and small businesses”.

Ms Reeves said it would be replaced with a “system fit for the 21st century”.

On home ownership, Ms Reeves said: “These stamp duty changes have been tried before. Last time the Government did it a third of the people who benefited were buying a second home, a third home or a buy-to-let property. Is that really the best use of taxpayers’ money when borrowing and debt are already so high?”

Ms Reeves criticised the Government for not having independent forecasts from the OBR in connection with the statement, adding: “Never has a Government borrowed so much and explained so little.

“Economic institutions matter yet this Government has undermined the Bank of England, sacked the respected permanent secretary at the Treasury and silenced the Office for Budget Responsibility. This is no way to build confidence, this is no way to build economic growth.”


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Cathy Jones
Cathy Jones
12 days ago

This is insanity.

hdavies15
hdavies15
12 days ago

They have hides like rhinos. Very well paid people don’t need handouts especially via the tax system. Indeed given the number of scams/schemes/loopholes and other “mitigation” channels open to them it is arguable that they should be paying more. That hike in N.I took money off those who could least afford it as well as their employers. Handing that back is an admission of stupidity but not until later this year. Corporation Tax could have stayed at the higher rate with possibly a higher threshold to capture serious levels of profitability. Again this is an area riddled with loopholes and… Read more »

Susan
Susan
12 days ago
Reply to  hdavies15

I don’t know about economic failure. It’s human failure. And so brazen.

Kerry Davies
Kerry Davies
12 days ago
Reply to  hdavies15

Hong Kong has a tax code 276 pages long. Some claim that the UK’s is 17,000 long though only 16,392 of them create loopholes for rich people.

Gareth
Gareth
12 days ago

This should come as no surprise. This is what neoliberal politics is all about. They do not need to raise much in taxes, as they want a minimum role for the state, and private companies running everything eg health, education. They tax less, because they want to spend less, simple, just look at the USA. We have a choice, it is called Annibyniaeth/Independence, or we can remain, and reap the benefits, or not, of being part of a privatised UK, where we continue to be ignored.

The original mark
The original mark
12 days ago

I would love for some tory supporters to explain exactly how this will benefit the worker on average take home pay or the person on benefits in any way at all. Even the Pope knows right wing trickle down policies doesn’t work.
If you vote tory your either very wealthy or just twp!

Rhufawn Jones
Rhufawn Jones
12 days ago

Gwarthus. Mae eisio ysgubo’r giwed gybyddylyd ac ariangar yma o’n gwlad. Wedi gwerthu’r hyn o enaid sydd ar ôl ganddynt. Ych a fi. Ysgymun!

Dai Cameron
Dai Cameron
12 days ago

*Tory donors* “Da iawn Bois bach, keep that gravy train a comin’.”

Crwtyddol
Crwtyddol
11 days ago

Branding it a fiscal event to avoid scrutiny is suggestive of Putin branding the invasion of Ukraine as a special operation

Fi yn unig
Fi yn unig
11 days ago

Raise the rich to a higher plain, dump on everyone else and tootle off to party conference to lap up the applause and avoid scrutiny. Surely their day of reckoning is nigh when the red wall collapses upon them and buries them in the pit of electoral obscurity.

Peter Cuthbert
Peter Cuthbert
11 days ago
Reply to  Fi yn unig

Yes plese and the sooner the better!

Mab Meirion
Mab Meirion
11 days ago

Scammed again…

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