UK chancellor unveils biggest tax cut in generations

UK chancellor Kwasi Kwarteng has slashed the top rate of income tax for the highest earners, as his mini-budget unveiled the biggest tax cuts since 1972.

The new single higher rate of tax will now be 40%. The chancellor said that the old 45% rate for those who earned over £150,000 was higher than countries like Norway, USA and Italy. Now, he claims the UK will have one of the most competitive and pro-growth income tax systems in the world.

Kwarteng also introduced a new basic rate for income tax of 19% from April 2023.

The corporation tax rises were also cancelled, keeping it at 19% as the government sets its sights on a 2.5% trend rate of growth.

He revealed a package of major cuts to Stamp Duty Land Tax with the nil rate band being doubled from £125,000 to £250,000. The government is going even further to support first time buyers, who will now pay no stamp duty up to £425,000, and increasing the value of the property on which first time buyers can claim relief, from £500,000 to £625,000.

The Annual Investment Allowance £1 million has been made permanent, rather than letting it return to £200,000 in March 2023. This gives 100% tax relief to businesses on their plant and machinery investments up to the higher £1 million limit.

In another surprise move Kwarteng said he was shutting down  the Office of Tax Simplification.

And, the IR35 rules have been simplified too. The chancellor said he was repealing the 2017 and 2021 reforms, which he said created unnecessary complexity and costs to business.

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