The Chancellor, Kwasi Kwarteng, has announced that the 45% Income Tax top tax rate will remain in place from next April. Interviewed on BBC Radio 4 on Monday morning, he admitted that his uncosted mini-budget proposal had become "a massive distraction".
The financial markets and the value of Sterling have been in turmoil since the Chancellor made his fiscal statement just over a week ago. The prime reason for this lack of stability was that tax cuts for higher-rate taxpayers were considered the wrong thing to do in a time of rising inflation. In addition, the statement was made ahead of any of the anticipated annual reports from the independent Office of Budget Responsibility (OBR).
When asked whether to apologise, Kwarteng said "We've listened to people. And yeah, there is humility and contrition in that and I'm happy to own it."
The Conservative Party is having its annual conference in Blackpool this week. Without a doubt, MPs will be putting a lot of pressure on Prime Minister Liz Truss and her new Chancellor to provide vital reassurance about the viability of their plans for growing the UK economy. Further announcements may be made when the OBR publishes its reports in early November.
Current Income Tax rates in England, Wales, and Northern Ireland are as follows:
Scottish Income Tax rates are slightly different
|
Rate |
% |
Tax bands 2021-22 & 2022-23 |
|
Savings rate* |
0% |
£0 - £5,000 |
|
Basic |
20% |
£0-£37,700 |
|
Higher |
40% |
£37,701-£150,000 |
|
Top |
45% |
£150,001+ |
Useful guides on this topic
Mini-budget 2022: at a glance
A summary for SMEs and their owners
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