Britain’s new finance minister Kwasi Kwarteng unveiled a package of measures on Friday including billions of pounds of tax cuts to boost economic growth and help alleviate the worst cost-of-living crisis in decades.
Below is a brief overview of the key measures announced in the mini-budget:
INCOME TAX CUTS
From April 2023 Britain will have a single higher rate of income tax of 40%, scrapping a previous higher 45% band. The basic rate of income tax would be cut to 19% in April 2023, one year earlier than expected.
STAMP DUTY CUT
Stamp duty, a tax on house purchases, will be cut to help families to afford to buy homes. The nil-band threshold for home movers will double to 250,000 pounds, while the nil-band threshold for first-time buyers will also increase to 425,000 from 300,000 pounds.
VAT-FREE SHOPPING FOR OVERSEAS VISITORS
Britain will introduce sales tax-free shopping for overseas visitors to boost the retail sector.
TAX INCENTIVES FOR INVESTMENT ZONES
Britain will introduce tax incentives for businesses in newly announced investment zones and liberalise planning rules for specified agreed sites.
CORPORATION TAX INCREASE SCRAPPED
Britain’s 19% corporation tax rate – the lowest among the G7 club of rich nations – had been due to rise to 25% in 2023 but the government decided to scrap those plans.
BANKER BONUSES CAP LIFTED
Caps on bankers’ bonuses will be scrapped to boost London’s post-Brexit competitiveness against financial capitals like New York and Hong Kong. [L8N30U19A]
Kwarteng said the government will set out a more ambitious set of financial services reforms later in the year.
COST OF ENERGY BAILOUT
Kwarteng said Britain will spend about 60 billion pounds ($67 billion) on subsidising gas and electricity bills for the next six months for households and businesses.
TIGHTENING STRIKE RULES
The government would force transport companies to maintain a minimum level of service during strike action, and require pay offers to be put to members during pay negotiations.
PAYROLL TAX RISE REVERSED
The government on Thursday announced it was scrapping a 1.25 percentage point increase in payroll tax – or national insurance – that took effect earlier this year will be reversed from Nov. 6.
DIVIDEND TAX RISE SCRAPPED
An increase to dividend tax rates which had been brought in alongside the payroll tax increase – to raise contributions from those who are paid through different channels – will be scrapped from April 2023.
(Reporting by Sachin Ravikumar and Andrew MacAskill; Editing by Catherine Evans)