People across the UK have been working out what the announcements in yesterday’s mini-budget mean for them after the Government announced the largest tax cuts in 50 years.
Chancellor Kwasi Kwarteng announced that the Tories will cut the likes of Income Tax, stamp duty, National Insurance and Corporation Tax in a bid to boost the economy as the cost of living crisis continues. The new plans, which also include getting rid of the cap on bankers’ bonuses and scrapping the top rate of Income Tax, have been widely criticised for disproportionately benefitting the wealthiest.
After the mini-Budget was announced, MoneySavingExpert founder Martin Lewis was quick to provide some clarity on the changes as he explained in a video how people would be affected by the new numbers. And the financial expert provided a positive update for those earning less than £50,000, The Mirror reports .
Branding the budget “staggering”, Martin said of the Government’s plans to grow the economy: “I really hope it works. I really worry what happens if it doesn't”. But he explained how the average worker would ‘gain’ from one announcement in a way that he said would not impact the highest earners.
The basic rate of Income Tax has been cut 1p from 20% to 19%, Martin explained. People currently start paying Income Tax when their earnings reach £12,570, meaning that anyone earning this amount or more will have more take home pay, he said.
The MSE founder added of the cut to Income Tax: “For anyone earning £50,000 and over, you don't really get any more gain. The gain is really on the income between £12,570 and £50,000.”
However, Martin also explained what the abolishing of the top rate of Income Tax means - a move that has come under fire after the Chancellor announced that the additional 45% previously paid on incomes over £150,000 would be scrapped. There will instead be a single higher rate of Income Tax of 40% for all those earning over £50,271 from April 2023.
Writing on Twitter, Martin said: “This means mega earners pay the same rate as those on £50,000.” This is not the only element of the Government’s mini-budget that critics have accused of failing to help those most in need.
John McCorry , CEO of Newcastle West End Foodbank, one of the busiest foodbanks in the UK, said: "There's nothing in this Budget that eases our concerns about the hardship that many communities are facing." Mr McCorry described the budget announcements as “an opportunity missed”.
He added: "At the very least it's very disappointing for working families and families on benefits. It does not offer any real response to addressing the financial crisis that people are in at the moment.”