There’s a hell of a lot of talk about the cost-of-living crisis at the moment. All the information out there can get confusing, and with winter around the corner (meaning bills could go through the roof), people are beginning to feel daunted about what’s to come.
The energy bill cap was raised in April this year, hiking prices up to £1,971 a year on average, and bills were predicted to hit £3,850 by January 2023. Fortunately for many, an across-the-board cap of £2,500 was announced earlier this month. Businesses have also been promised help. But the cost of everything friggin’ else is still rising, and things still aren’t looking all that rosy. So what other support could be coming our way?
Today the Chancellor of the Exchequer Kwasi Kwarteng has been outlining the government’s plans for tax cuts and various other measures designed to encourage growth as part of a package of support that’s being billed as a ‘mini budget’. But what does it all mean? Here’s everything you need to know – and how it will affect you.
What’s in the mini-budget?
Some of the most notable measures include:
- Basic rate of income tax to be cut by 1p to 19p from April next year
- Top rate of income tax cut from 45p to 40p
- Cuts to stamp duty, with first-time buyers not paying tax on first £425,000 of property (up from £300,000)
- Rise in National Insurance payments reversed
- Cuts to the planned 6 percent rise to corporation tax
- Bankers’ bonuses cap scrapped
- Subsidies for energy bills for both homes and businesses to cost the government £60 billion
- Duty rate increases for alcohol scrapped
- VAT scrapped on shopping for overseas visitors
- Government to set up investment zones in 38 local areas
Will I pay less National Insurance?
The chancellor has confirmed that the recent rise in National Insurance payments will be reversed from November 6.
Ex-chancellor Rishi Sunak had raised National Insurance payments by 1.25 percent in April this year to help rebuild the economy post-Covid. The rise was intended to fund health and social care. Now the government says that funding will come from general taxation.
Will there be cuts to stamp duty?
Stamp duty (the tax you pay when you buy a property) is going to be cut. Currently, first-time buyers don’t pay any tax on the first £300,000 of the property they’re buying. That’s going to be raised to £425,000, and the chancellor says this is permanent.
Those who aren’t first-time buyers currently don’t have to pay any stamp duty on the first £125,000 when buying a property. This is now being doubled to £250,000. These changes are effective from today.
Will I pay less income tax?
Income tax will be cut by a penny to 19p in April 2023. This is a year earlier than was originally planned.
The 45p tax rate for the top earners in the UK (those who earn over £150,000 a year) is being abolished from April next year.
What will happen to universal credit?
Rules around universal credit will be tightened, by cutting benefits for those who don’t fulfil job search commitments. Around 120,000 people on universal credit will be asked to actively seek more work (or face having their benefits cut).
Why is it called a mini-budget?
The government is calling this a ‘fiscal event’, which basically means it’s a major decision being made about taxes and spending. But it because isn’t being accompanied by an official analysis of its impact on the economy, it isn’t being deemed a fully-fledged budget. Instead, the media are calling it a mini-budget.