CHANCELLOR Kwasi Kwarteng unveiled a bumper mini budget today, slashing taxes and cutting red tape to ease the cost of living squeeze.
A tax cuts bonanza will make millions of households better off in just weeks – but not everyone will benefit from his mega money policies.
While budding homebuyers, bankers and self-employed workers were given a boost, pension savers and thousands on Universal Credit weren’t as lucky.
We round up who missed out and who gained from the mini budget – and how it will affect you.
Here are all the winners…
Those looking to buy a new home are in line to save up to thousands of pounds thanks to a stamp duty shake-up.
Stamp duty land tax (SDLT) is a lump sum payment you have to make when purchasing property over a certain threshold.
Previously, no stamp duty was paid on the first £125,000 of any property purchase.
But the Chancellor confirmed the threshold for paying stamp duty will shoot up to £250,000 from tonight.
First-time buyers will emerge as big winners from the relief too.
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Currently, first-time buyers pay no stamp duty on the first £300,000 of a property purchase, but this threshold will be increased to £425,000.
The government is also going to increase the value of the property on which first time buyers can claim relief from £500,000 to £625,000.
An increase to the thresholds at which you pay the tax could save some buyers thousands of pounds.
Punters can raise a glass to Mr Kwarteng’s mini budget.
He announced that a planned hike to alcohol prices would be scrapped.
Those heading to the pub should benefit, as this is expected to stop the price of pints spiralling.
It means you can enjoy a beer at your local boozer without fear of forking out £14 for it.
Fat cats in the city will be raking it in following the mini budget today.
Mr Kwarteng announced bankers’ bonus caps would be axed.
Previously, they could only earn less than 200% of their salary as an added pay boost – but now they could get anything.
A limit on bankers’ bonuses was introduced by the EU in the aftermath of the 2007-2008 financial crash.
The government thinks axing the cap will tempt big businesses into London and boost economic growth.
Self-employed workers are in line to save money as part of a major tax shake-up.
Controversial IR35 tax rules will be axed from April next year, which applies to self-employed workers who have set themselves up as private companies.
This includes self-employed workers like delivery drivers, building contractors and many others who mainly work for other businesses who are not on the payroll.
Under the current IR35 system, you don’t get to decide your tax status – the business you work for does.
It means self-employed workers often end up forking out unnecessary costs – and IR35 has been blamed for causing employers to swerve using freelancers to avoid a big tax bill sting.
That means more contractors could be taken on by companies following the rule change.
Here’s the list of people who lost out on big budget help…
Universal Credit claimants
Around 120,000 Universal Credit claimants will be slapped with tougher rules because of a big mini budget announcement.
People who work the equivalent of 12 hours or less a week at the National Living Wage have to look for more or better paid work.
But this will requirement will now rise to 15 hours a week, Mr Kwarteng said.
It means you have to do more to increase your earnings or risk seeing your benefits reduced or even stopped all together.
So if you don’t follow the new rules, your payments could be affected.
While homebuyers are set to save thousands, renters won’t be so lucky.
A stamp duty relief means homebuyers can bag a home without having to fork out thousands on a tax.
Meanwhile, rent is soaring – earlier this year, a record number of landlords raised their rates.
Recent runaway house prices has seen more people turn to renting as they are priced out of the market.
It means you’ll still be paying sky-high rent, while those lucky enough to buy will be cashing in on the stamp duty tax relief.
Workers are set to see less money going into their pension pot after a cut to income tax.
The Chancellor announced that the basic rate of income tax, currently 20%, will be reduced to 19% from next April.
While it gives workers a boost to their pay packet in the short term, as they will pay less tax, it will hit retirement savings in the long term.
When you pay into your pension you usually get tax relief. For basic rate taxpayers it’s currently 20%, but when that’s cut to 19%, so will the tax relief.
“The reduction in the basic rate of income tax from 20% to 19% will be good news for millions of individuals.
Steven Cameron, pensions director at Aegon said: “There is a slight sting in the tail regarding pension contributions.
“Individuals receive a ‘tax relief’ top-up based on their ‘highest marginal’ rate of income tax.
“Currently, the ‘net’ cost to an individual of investing £100 in their pension is £80 as when paying 20% income tax, their pension receives a £20 top-up from the tax man.
“In future, a 19% income tax rate means you’d need to pay in £81 from take-home pay to have £100 invested in your pension.
“So if individuals continue to pay in £80, their pension will benefit from a slightly lower £98.75.”
But he added that despite the cut, pensions are still among the most tax-efficient ways to save.
Although a cut to National Insurance will benefit millions, low earners won’t benefit as much as those on high incomes.
Low earners – those earning less than £12,570 – won’t benefit from the change at all.
You don’t pay any tax under this amount which is your tax-free personal allowance.
The exact amount that you will save will depend on how much you earn.
Personal finance specialists at Hargreaves Lansdown have worked out how much people will save based off their earning – and the biggest savings will be seen among those with higher pay checks.
- Those on £20,000 will save £93 a year
- Individuals earning £30,000 a year will save £218 a year
- Those on £40,000 will save £343 a year
- Those on £50,000 will save £468 a year
- Individuals on £60,000 will save £593 a year