The Mini-Budget - Kwarteng U-turns on 45% Top Rate

Controversial: Politics & Govt Politics & Govt: Chat / Discussions
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Your assistance my be needed again … to translate and unravel Kwasi Kwarteng’s statements, in the Commons today, regarding tax cuts, energy bill support and UK economic growth.

Summary (so far)

  1. Chancellor Kwasi Kwarteng has outlined a series of tax cuts and economic measures in a massive shake-up of the UK’s finances
  2. The basic rate of income tax has been cut to 19p in April 2023 and the 45% top rate of tax for higher earners abolished
  3. The threshold before stamp duty is paid has been raised to £250,000 - for first time buyers it is raised to £425,000
  4. The cap on bankers’ bonuses has been lifted, and a planned rise in corporation tax has been scrapped
  5. An increase in National Insurance has been reversed, and low-tax investment zones will be set up across the UK
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It’s all basic maths. Here’s another treasury style conversation

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Kwasi Kwarteng says the Government aims to reach an annual rate of 2.5% for growth,

“We need a new approach for a new era, focused on growth. Our aim, over the medium term, is to reach a trend rate of growth of 2.5%.” he said. “And our plan is to expand the supply side of the economy through tax incentives and reform.” He says this will be focussed on three priorities, maintaining responsible public finances, reforming the supply-side of the economy and cutting taxes to boost growth.

So that’ll be the Tory government borrowing more (paid back by taxpayers), scrapping business regulations and letting businesses keep more of their profits … :roll_eyes:

Mr Kwarteng tells MPs Government’s energy support scheme will cost £6bn for six months.

He said: “The House should note that the estimated costs of our energy plans are particularly uncertain, given volatile energy prices. But based on recent prices, the total cost of the energy package, for the six months from October, is expected to be around £60bn. We expect the cost to come down as we negotiate new, long term energy contracts with suppliers.”

Let me guess - given the “volatility” of energy prices, any contract that the government negotiate with energy suppliers will mean that the taxpayers will pay more for less … :roll_eyes:

Kwarteng: Planning reform to help infrastructure projects off the ground

Mr Kwarteng pledges an overhaul of planning rules surrounding nationally important infrastructure projects to get them off the ground. He announces a new bill “to unpick the complex patchwork of planning restrictions and EU-derived laws that constrain our growth”.

He tells MPs: “Today, we are publishing a list of infrastructure projects that will be prioritised for acceleration, in sectors like transport, energy, and telecoms. And, to increase housing supply and enable forthcoming planning reforms, we will also increase the disposal of surplus government land to build new homes”.

No doubt the planning rules for fracking will be “overhauled”, too … :roll_eyes:

Kwarteng confirms cancellation of planned increase in Corporation Tax

Mr Kwarteng confirms the Government will drop a planned increase in corporation tax to 25%, meaning it will instead stay at 19%.

He said: “Every additional tax on business is ultimately passed through to families through higher prices, lower pay, or lower returns on savings.”

Well, he would say that wouldn’t he … :roll_eyes:

Kwarteng confirms scrapping of bankers’ bonus cap

The Chancellor has confirmed trailed plans to scrap a cap on bankers’ bonus. He tells MPs the cap only pushed up the basic salaries of bankers and scrapping it will encourage global banks to invest in the UK

No … I still don’t get that … :roll_eyes:

VAT-free shopping for tourists, says Chancellor

Mr Kwarteng tells MPs that overseas visitors will have VAT-free shopping.

“Britain welcomes millions of tourists every year, and I want our high streets and airports, our ports and our shopping centres, to feel the economic benefit,” he said. “So we have decided to introduce VAT-free shopping for overseas visitors.”

Well, that’s even less coming back into the country’s tax coffers … :roll_eyes:

Top rate of income tax of 45% to be abolished

Another eye-catching measure announced by Mr Kwarteng is abolishing the top rate of income tax of 45%. From April 2023, the rate will be reduced to 40%. I’m not going to cut the additional rate of tax today, Mr Speaker. I’m going to abolish it altogether. This will simplify the tax system and make Britain more competitive”.

Probably not … but the rich will become richer … :roll_eyes:

Cut in rate of basic rate of income tax

Mr Kwarteng also said the basic rate of income tax would be cut to 19p by April 2023, a year earlier than planned.

“That means a tax cut for over 31m people in just a few months’ time,” he said. “That means we will have one of the most competitive and pro-growth income tax systems in the world.”

So, a few coppers more in the working-man’s pocket and billions less in those tax coffers … :roll_eyes:

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@Omah ,. Fink lm gonna immigrate again Omah ?
Before the exchange rate goes too low ? :worried::worried:

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Pounds sinks to new 37-year low

The pound sank to a fresh 37-year low as the Chancellor unveiled tens of billions of pounds of tax cuts and spending on Wednesday morning.

The FTSE 100 plunged to its lowest level in two months.

Sterling declined by as much as 0.89% to 1.115 US dollars as Kwasi Kwarteng spoke to Parliament at 9.30am on Friday.

It has since stabilised at around 1.119 dollars, but this remains below the previous 37-year low struck earlier this week after concerns over surging interest rates hit the currency.

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@Omah , Ooooer! Too late fer me then ?? :worried::worried:
I’m condemned to poverty, again !!

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I think most of us are while “Visionary” Truss is PM … :090:

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Kwasi Kwarteng has said massive tax cuts aimed at boosting economic growth are fair for all despite the highest earners gaining the most. Mr Kwarteng said he was “being fair” by reducing taxes right across the income bracket.

The package of measures, which has been dubbed a mini-budget, will be paid for by a sharp rise in government borrowing amounting to tens of billions of pounds.

In an interview with BBC News political editor Chris Mason, the chancellor said: “I don’t think it’s a gamble at all. What was a gamble, in my view, was sticking to the course we are on.”

Asked whether the UK economy was now in recession, Mr Kwarteng said that while, “technically, the Bank of England said that there was a recession”, he thought it “would be shallow” and he hoped “we would rebound and grow”. When pressed, the chancellor said he did not acknowledge that the UK was in recession and that one was not inevitable.

The Institute of Fiscal Studies said the richest 10% of households would gain the most from Mr Kwarteng’s measures, which undo the tax rises introduced by former chancellor Rishi Sunak, who left office in July.

Torsten Bell, the chief executive of the Resolution Foundation think tank, said those earning £1m annually will get a £55,000 tax cut next year.

Perhaps KK doesn’t know what “fair” means to the electorate who live in the remaining 10% of households … :roll_eyes:

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What different financial experts think:

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Income tax

  • Cut in basic rate of income tax to 19% from April 2023
  • Government estimates 31 million people getting £170 a year more
  • Currently, people in England, Wales and Northern Ireland pay 20% on any annual earning between £12,571 to £50,270 - rates in Scotland are different
  • 45% higher rate of income tax abolished for England, Wales and Northern Ireland taxpayers
  • One single higher rate of income tax of 40% from April next year

National Insurance

Corporation tax

Benefits

  • Rules around universal credit tightened, by reducing benefits if people don’t fulfil job search commitments
  • Around 120,000 more people on Universal Credit to be asked to take steps to seek more work, or face having their benefits reduced
  • Jobseekers over 50 to be given extra time with work coaches to help them return to job market

Work and investment

  • IR35 rules - the rules which govern off-payroll working - to be simplified
  • Annual investment allowance, the amount companies can invest tax free, remains at £1m indefinitely
  • Regulations change so pensions funds can increase UK investments
  • New and start-up companies able to raise up to £250,000 under scheme giving tax relief to investors
  • Share options for employees doubled from £30,000 to £60,000

Stamp duty

  • Cut to stamp duty which is paid when people buy a property in England and Northern Ireland
  • No stamp duty on first £250,000 and for first time buyers that rises to £425,000 - comes into operation today
  • 200,000 more people will be taken out of paying stamp duty altogether, government claims

Energy

  • Freeze on energy bills, which the government claims will reduce inflation by 5 percentage points
  • Total cost for the energy package expected to be around £60bn for the six months from October

Bankers’ bonuses

  • Rules which limit bankers’ bonuses scrapped
  • Package of regulatory reforms to be set out later in the autumn

Shopping

  • VAT-free shopping for overseas visitors
  • Planned increases in the duties on beer, for cider, for wine, and for spirits cancelled

Infrastructure and investment zones

  • Government discussing setting up investment zones with 38 local areas in England
  • Tax cuts and liberalised planning rules to be offered to release land for housing and commercial use
  • Investment zones offered measures such as no business rates and stamp duty waived
  • New legislation to cut planning rules, get rid of EU regulations and environmental assessments in an effort to speed up building
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What do you think of this government’s ‘mini’ budget ??
Looks like we are borrowing to pay for our borrowing to me?
The bankers we are borrowing from must be laughing all the way to the bank
today.
Not only have we doubled up on our borrowing, but we are borrowing at
a time when interest rates are trending upwards !
This means we will end up paying possibly five times more than was
expected !!
Plus the £ is dropping in value at the same time !
This will further increase food prices !!
Have a good day !! :roll_eyes::roll_eyes::roll_eyes:

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I’m bemused by the removal of stamp duty for properties up to £250k to help first time buyers. Naturally, sellers will increase the sale price accordingly to capitalise on this, and the Bank of England will increase interest rates which will make mortgages more expensive anyway.

Both of these will deter, er, first time buyers.

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@Dextrous63 , By the end of the year, unless the big gamble the government
has just made on our behalf pays off, nobody will be worrying about
buying houses !! :worried::worried:

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Hi

Absolutely spot on, brilliant post.

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The money markets have made their views on the budget and how it will impact the UK economy - the pound has fallen hard. Their views make sense - interest rates are going up and government borrowing set to massively increase so the UK will start to struggle to pay for this huge debt. Reducing taxation take is exactly the wrong thing to do, especially it will put meaningful amounts of disposable income into the pockets of only a very few. Growth ain’t going to come from a few bankers buying an italian kitchen or paying that bit more for their bottle of wine.

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@strathmore , Ain’t that wot l just said Straffy ?? :roll_eyes::roll_eyes:

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@strathmore, it’s all going to plan. Not sure what the plan actually is, nor whether they used a more modern computer than a Sinclair zx81 and adapted the biorhythm program that people used to type in to model it all, but its all grist to the mill now. :wink::rofl::rofl:

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Hi

The falling £ makes imports more expensive and the things we export cheaper for others to buy.

It is basically an old fashioned devaluation, the famous the £ in your pocket speech.

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@swimfeeders , If only we had something to export Swimmy ??
:-1::thinking::thinking::-1:

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It was a fat lie last time round and it is again today. There is so much we import and will keep importing even if the prices go up. So that ends up being inflation. And with inflation the pound in your pocket is worth less.
And the notion that exports will shoot up when the pound devalues has shown again and again to be a whimsical wish and not borne out in reality. KK & LT are going to ruin the UK.