Chancellor Kwasi Kwarteng abolished the top rate of income tax for the highest earners as he spent tens of billions of pounds in a “gamble” to drive up growth during a cost-of-living crisis.
In a so-called mini-budget axing the cap on bankers’ bonuses and adding restrictions to the welfare system, he argued that tax cuts are “central to solving the riddle of growth”.
Treasury estimates put the raft of cuts, including Liz Truss’s promises to reverse the national insurance rise and axe the hike to corporation tax, as costing nearly £45 billion a year in 2026.
From April, the 629,000 earners getting more than £150,000 a year will no longer pay the top income tax rate of 45% and will instead pay the 40% applicable to those on over £50,271.
And he brought forward the planned cut to the basic rate of income tax to 19p in the pound a year early to April.
Mr Kwarteng also revealed his estimate that the two-year energy bills bailout will cost around £60 billion over the first six months from October.
The major spending package also included:
– A cut to stamp duty, meaning 200,000 less people will pay the tax on house purchases.
– The introduce of VAT-free shopping for overseas visitors.
– Legislation to force trade unions to put pay offers to a member vote so strikes can only be called once negotiations have fully broken down.
– Confirmation of plans to make around 120,000 more people on Universal Credit take active steps to seek more and better paid work, or face having their benefits reduced.
Reaction to the budget was quick to pour in.
We’ve rounded up the best of it below:
Related: Reaction as Labour mulls abolishing House of Lords if it wins next election
