As part of the plan to cost of living crisis, the government announced it would lower the base rate of income tax from 20p to 19p, paid on incomes between £12,750 and £50,270. The government will also scrap the 45 per cent rate for the UK’s richest earners, who receive more than £150,000.
The Health and Social Care Levy, introduced on 6 April 2022, also raised the threshold for people to pay national insurance to £9,880 a year.
The levy will be abolished from 6 November, but the higher threshold for paying the national insurance schemes will remain.
This week, Mr Kwarteng unveiled his mini-budget in hopes of delivering billions of pounds in tax cuts.
It comes as Prime Minister Liz Truss wants to boost the country’s faltering economic growth.
The mini-budget changes will affect people differently depending on the annual salary they earn.
By including your annual salary, you can see how much income tax and national insurance contributions you pay; and how much you will save next year, by using our budget calculator.
Click hover there to see how much you can save.
READ MORE: Liz Responsible for Biggest Taxpayer in History – ANDY MAYER
The chancellor announced measures Friday morning designed to boost the economy during the much anticipated “fiscal event”.
Mr Kwarteng told MPs that the planned corporate tax increase would be canceled as he announced that the cap on banker bonuses would be removed.
He also announced that the base rate of income tax would be reduced to 19 pence in the pound from April 2023.
The 45 percent higher income tax rate will also be “abolished,” he said.
Not everyone is happy with the plans, as some critics have noted that the wealthiest members of society will be even better off with the tax cuts.
Economists at the Institute of Fiscal Studies warned that nearly half of the new chancellor’s £45bn savings will go to the top five percent of earners.
Professor Jo Maugham said: “Liz Truss’ budget means those making one million a year will have an extra £54,400 in their pockets after taxes and NICs. For those making £25,000, the equivalent figure is around £280.
“A worse response to a cost of living crisis is hard to imagine.”