STRUGGLING households will benefit from a raft of measures – including tax cuts – announced in today’s mini Budget.
There were 30 mega money policies announced by Chancellor Kwasi Kwarteng to boost the economy and tackle the cost of living crisis.
He unleashed the biggest tax cuts bonanza since the 1980s to make millions of households better off within weeks.
Mr Kwarteng said: “We will deliver higher wages, greater opportunities, and fund public services, now and into the future.”
In other mini budget developments…
- Stamp Duty was cut to save homebuyers thousands of pounds and get more people on property ladder
- A planned hike in corporation tax was axed
- Boozers were handed a huge boost today as alcohol price hikes were scrapped by the Chancellor
- Duty free shopping will now be available outside of airports for holidaymakers
- Taxes will be slashed for thousands of Brits living in investment zones
It comes as the government has already announced energy bills will be frozen at £2,500 for two years from October 1.
But the government announced more measures today to help households as the big squeeze continues.
From big businesses to self-employed workers to households struggling to get by, here’s all the announcements you need to know about – and how they affect you.
Stamp duty slashed
Budding buyers looking to bag a new home will benefit from a cut to stamp duty.
Stamp duty land tax (SDLT) is a lump sum payment you have to make when purchasing property over a certain threshold.
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Previously, no stamp duty was paid on the first £125,000 of any property purchase.
But to kickstart a homebuying revolution, the Chancellor confirmed the threshold for paying stamp duty will shoot up to £250,000 from tonight.
First-time buyers will majorly benefit from the relief too.
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.
National Insurance hike reversed
Millions of households have been given a tax cut worth hundreds of pounds after the Chancellor reversed the National Insurance rate rise.
National Insurance increased by 1.25 percentage points in April this year, jumping from 12% to 13.25%.
But in a big U-turn, Mr Kwarteng announced this would be reversed, with the changes rolling out from November 6 this year.
He said: “Reversing the Levy delivers a tax cut for 28 million people, worth, on average, £330 every year.”
The exact amount that you will save will depend on how much you earn.
Personal finance experts at Hargreaves Lansdown crunches the numbers for The Sun on how much different earners will save:
- 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
- Lower earners, on less than £12,570 a year, won’t benefit from the change
Alcohol price hikes scrapped
Boozers were handed a huge boost as alcohol price hikes were scrapped.
Punters should benefit as this is expected to stop the price of pints spiralling.
Hikes to duty rates for beer, for cider, for wine, and for spirits “will all be cancelled”, Mr Kwarteng said.
It comes as experts have predicted the price of a pint could rocket to a whopping £14 as the boozers and brewers buckle under rising costs and bills.
Huge boost for self-employed workers
A major tax shake-up for self-employed workers is expected to help save them money and snip red tape for employers.
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.
Universal Credit changes revealed
Around 120,000 on Universal Credit face tougher rules if they don’t work enough hours.
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.
If you don’t follow the new rules then your payments could be affected – they could be cut or even stopped all together.
It means you will have to do more to increase your earnings or risk seeing your benefits hit.
Income tax cut
Around 31million people are set to get £170 put back into their pockets after Mr Kwarteng announced a big income tax cut.
He confirmed a 1p cut to the basic rate of income tax, which will roll out in April next year.
It means that the basic rate of income tax you pay in the pound will drop from 20p to 19p.
The cut in the basic rate of income tax applies to people who earn between £12,571 to £50,270.
Data provided by Blick Rothenberg suggests it will save:
- Those earning £15,000 a year £24.30 a year
- Those earning £25,000 a year will save £124.30
- Workers with incomes of £35,000 a year will save £224.30
- Those earning £50,000 a year will save £374
Workers only start paying income tax once they start earning over the personal allowance – which currently stands at £12,570.
Any income earned up to £12,570 is tax-free.
What else was announced?
A planned hike in corporation tax was axed in the emergency mini budget.
It was due to rise from 19% to 25% next April.
The tax cut has been made in a bid to boost investment into Britain by major companies.
It could also help consumers – tax cuts could be passed down from businesses to shoppers.
New investment zones will be set up in 38 areas of the UK.
Ultra low tax and low regulation areas of the country will be set up in a bid to boost housebuilding and create new jobs.
You can see the full list of areas here.
The cap on bankers’ bonuses was thrown in the bin too.
Currently, fat cats can only earn less than 200% of their salary as an added goodie, but now the sky’s the limit.
The government thinks that axing the cap will speed up growth by luring firms to London rather than rivals New York, Frankfurt and Paris.