In a radical package of tax cuts, Chancellor Kwasi Kwarteng has brought forward a reduction in the basic rate of income tax relief, cut National Insurance contributions and abolished the additional rate of l ‘income tax.
Kwarteng announced in his mini-budget on Friday that the 1pc cut in the basic rate of income tax, first announced by former chancellor Rishi Sunak, will be brought forward by a year.
This means that from April 2023, basic rate taxpayers will pay 19% personal income tax, up from 20%. According to Kwarteng, this means an average tax saving of £170 next year for 31 million people.
The additional rate of income tax (45% for workers earning £150,000 or more) has also been abolished. Anyone earning more than £50,271 will pay the higher rate of 40pc after the change starts in April 2023.