The Chancellor Kwasi Kwarteng has brought forward by a year the cut in the basic rate of income tax to 19% from April 2023
At the same time, the 45% additional rate of income tax will be removed so that top earners taking home more than £150,000 will now pay 40% on earnings above £50,271.
There will be a four-year transition period for Gift Aid relief to maintain the income tax basic rate relief at 20% until April 2027.
The dividend additional rate will also be removed to align with the dividend upper rate, which is being reduced to 32.5% from 6 April 2023.
From April 2023 additional rate taxpayers will also be given a personal savings allowance of £500, in line with higher rate taxpayers. This was not previously available to them. This gives them up to £500 tax free allowance on interest on savings.
The Chancellor has confirmed that he will cut national insurance by 1.25% for employees and employers from 6 November
Scrapping the rise will reduce tax for 920,000 businesses by nearly £10,000 on average next year as they will no longer pay a higher level of employer National Insurance and can now invest the money as they choose, Chancellor Kwasi Kwarteng said.
The Treasury has confirmed that the national insurance cut will go ahead, effectively abolishing the Health and Social Care Levy introduced by former Chancellor Rishi Sunak.
The NI cut will help almost 28 million people across the UK, worth an extra £330 on average in 2023-24, with an additional saving of around £135 on average this year due to the increase in the national insurance threshold which came into effect in July and is not being reversed.
In a welcome move for businesses, the Chancellor announced plans to set the annual investment allowance at £1m on a permanent basis
The annual investment allowance threshold has been permanently set at £1m, rather than reverting to £200,000 as was originally planned for April 2023.
The threshold for stamp duty land tax (SDLT) has been doubled to £250,000 for all home purchases with immediate effect
The current £125,000 nil rate threshold has been doubled to £250,000, bringing the figure close to the average UK house price. The change will come into force from 23 September.
At the same time, the threshold at which first-time buyers begin to pay SDLT will increase from £300,000 to £425,000, and the maximum value of a property on which first-time buyers’ relief can be claimed will also increase from £500,000 to £625,000.
The Chancellor confirmed that the planned 6% rise in corporation tax will not go ahead in April 2023 with rates set at 19%
The current 19% corporation tax rate was confirmed in Kwasi Kwarteng’s statement to the House.
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