LIZ Truss will SCRAP corporation tax and National Insurance hikes in a range of new measures to be revealed by the chancellor today.
Kwasi Kwarteng is set to give his highly anticipated Mini Budget statement today at 9:30am – where he’s expected to announce a range of tax cuts.
Also expected to be announced is Liz Truss‘ plan ‘to cut Stamp Duty’ and help Britain’s drive economic growth – with Whitehall sources saying the move could be a “rabbit” out of the hat in Mr Kwarteng’s planned speech.
But the Chancellor will also reveal more than 100,000 people in part-time work could face a benefit cut if they fail to actively seek more work in a major shake-up of the welfare system.
It comes after Ms Truss revealed to US corporations on Wednesday that she will slate Rishi Sunak’s scheduled corporation tax hike in a bold attempt to attract the nation’s investment to the UK.
Read our Mini Budget 2022 live blog below for the latest…
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UK borrowing could hit £100 billion a year
A respected financial research group has warned that the mini budget and government plans to tackle a looming recession could result in increasing the UK debt.
The Institute of Fiscal Studies warned that Liz Truss’s government could put public finances on an “unsustainable path”.
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NI cuts won’t protect families on low wages
The government has announced a halt in increasing national insurance, meaning there will be a 1.25 per cent decrease in contributions on 6 November.
National insurance is only charged for those earning £12,570 a year.
Therefore the more you earn, the more you can save on this contribution. It won’t make a huge difference to those on lower wages.
It was reported by the Mirror that the Institute for Fiscal Studies announced that it will give the poorest tenth just £7.66 a year. while the richest tenth save £1,801.89.
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UK economy will enter recession, BoE claims
Senior Sun money journalist Lucy Alderson writes how the the Bank of England has warned that the UK economy will officially enter recession by the end of the month.
A country is in recession when its economy shrinks over a sustained period of time, rather than growing normally.
A slowdown in retail spending and manufacturing output has prompted the Bank of England to say that it expected UK GDP to have fallen by 0.1 per cent in the three months to the end of August – indicating the country is already in recession.
This is below its projections of a 0.4 per cent growth and marks a second successive quarterly decline.
It said there had been a smaller-than-expected bounce back from the Jubilee bank holiday and warned there would be an economic hit from the extra holiday for the Queen’s state funeral.
It takes two quarters of shrinking growth for economists to qualify a downturn as recession.
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What time is the mini budget announced tomorrow?
The highly anticipated mini budget could include NI cuts, and a pension triple lock.
The mini budget will be revealed on Friday 23 September at around 09:30am.
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UK’s economic timeline to be published
The Chancellor has announced that the economic forecast from the Office for Budget Responsibility (OBR) will be provided.
It was revealed that the Treasury Committee wrote to Mr Kwasi Kwarteng, urging him to release the data along with the mini budget tomorrow.
In a letter responding to the committee, the Chancellor said: “In the first days of the new Government, we have provided significant support for households and businesses and are acting swiftly to set out a growth plan to Parliament on Friday.
“We remain committed to two forecasts in this fiscal year, as required by legislation. I will provide an update on the timetable for an OBR forecast during my statement to the House on September 23.”
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The National Insurance cut – what you could save
It has been announced by the Business Secretary Kwasi Kwarteng this afternoon that a reduction will be made on 6 November.
- £10,000 salary: No change as you don’t pay National Insurance
- £15,000 salary: £30 a year
- £20,000 salary: £93 a year
- £25,000 salary: £155 a year
- £30,000 salary: £218 a year
- £35,000 salary: £280 a year
- £40,000 salary: £343 a year
- £45,000 salary: £405 a year
- £50,000 salary: £468 a year
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Reversal of the NI hike praised by campaigners
The boss of pressure group Taxpayers Alliance has celebrated the decision to reverse the NI increase.
TaxPayers’ Alliance campaign group, said: “It’s long past time that the government abandoned this punishing tax hike on working people and employers alike.
“It never made any sense to introduce a tax which would see a huge hit to jobs and growth, just as the country was trying to get back on its feet.
“The Chancellor should go further on Friday and ensure this mini-Budget is a growth game-changer.”
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MP response to Universal Credit crack down plans
The Shadow Work and Pensions Secretary has spoken out against the government plans to sanction those who are not actively looking for work while claiming benefits.
“So Tory ministers think [the] reason we have over a million vacancies is because the low paid aren’t working hard enough and need to be threatened with sanctions but bankers needs bumper bonuses.
“We need a serious plan to support people to return to work & increase labour supply,” tweeted Mr Ashworth.
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Liz Truss plans to target the ‘economically inactive’
Liz Truss has claimed that Britain will be “unashamedly pro-business” during her time as PM.
During her address in New York she said she wants to target the “economically inactive” to “encourage more of them to go into work”.
The “economically inactive” consists of around nine million people, with many either not in work or not looking for a job.
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What is a recession?
The Bank of England has warned the UK may “already” be in a recession, here is a (very basic) break down of what this means…
- Recession means the halt or reverse of the nation’s economic growth, as the GDP (gross domestic product) increases, that’s the amount of goods and services the UK provides.
- When the GDP shrinks, for more than six months, it is considered to be a recession.
- With a growing economy, the more money the government has to fund public services, but if it shrinks, the less there is for things like the NHS, local councils, etc.
- A recession can result in the loss of jobs as companies lose money, or pay rises might be scarce, making it difficult to keep up with the cost of living.
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UK may ‘already’ be in recession as interest rates soar higher than 2008 levels
The Bank of England has confirmed an inflation increase of 2.25 per cent.
“Should the outlook suggest more persistent inflationary pressures, including from stronger demand, the Committee will respond forcefully, as necessary,” the BoE said.
Interest rates have hit a 14 year high,
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Dividend tax cut to come into effect in April 2023
It is hoped that the cut will encourage more “support for entrepreneurs and investors” to grow the UK economy.
This will come into force in April 2023, and it is thought that on average it could save taxpayers £345 per year.
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UK borrowing could hit £100 billion a year
A respected financial research group has warned that the mini budget and government plans to tackle a looming recession could result in increasing the UK debt.
The Institute of Fiscal Studies warned that Liz Truss’s government could put public finances on an “unsustainable path”.
-
NI cuts won’t protect families on low wages
The government has announced a halt in increasing national insurance, meaning there will be a 1.25 per cent decrease in contributions on 6 November.
National insurance is only charged for those earning £12,570 a year.
Therefore the more you earn, the more you can save on this contribution. It won’t make a huge difference to those on lower wages.
It was reported by the Mirror that the Institute for Fiscal Studies announced that it will give the poorest tenth just £7.66 a year. while the richest tenth save £1,801.89.
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Job seekers benefit crack downs
It is reported that the Prime Minister is taking a strict approach towards those who are out of work.
Liz Truss is thought to be about to launch stricter parameters on benefit claimers.
If you claim benefits and are not actively seeking work until you are employed for 15 hours a week, you could be sanctioned.
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The National Insurance cut – what you could save
It has been announced by the Business Secretary Kwasi Kwarteng this afternoon that a reduction will be made on 6 November.
- £10,000 salary: No change as you don’t pay National Insurance
- £15,000 salary: £30 a year
- £20,000 salary: £93 a year
- £25,000 salary: £155 a year
- £30,000 salary: £218 a year
- £35,000 salary: £280 a year
- £40,000 salary: £343 a year
- £45,000 salary: £405 a year
- £50,000 salary: £468 a year
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‘Long term financial independence’ could be dented by spending support
The governments growth plan is not without its risks, according to a tax and financial planning expert.
Rachael Griffin from Quilter, told Investment Week: “Truss has so far not put forward any detailed proposals for how the planned social care reforms will be paid for without the NI increase.
“Scrapping the NI hike may risk leading to a situation where Truss has to rob Peter to pay Paul if she wants to keep the planned social care reforms,” Valeria Martinez reported.
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Reversal of the NI hike praised by campaigners
The boss of pressure group Taxpayers Alliance has celebrated the decision to reverse the NI increase.
TaxPayers’ Alliance campaign group, said: “It’s long past time that the government abandoned this punishing tax hike on working people and employers alike.
“It never made any sense to introduce a tax which would see a huge hit to jobs and growth, just as the country was trying to get back on its feet.
“The Chancellor should go further on Friday and ensure this mini-Budget is a growth game-changer.”
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Health and Social Care levy to be replaced
It has been reported that the levy that was expected to bring in £13 billion a year to fund the NHS has been scrapped.
The levy will be replaced with general taxation, it is hoped in the coming months the economy will grow.
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NI increase reversed
It has been revealed that the government will reverse a 1.25 per cent national insurance increase from 6 November.
Business Secretary Kwasi Kwarteng said: “Taxing our way to prosperity has never worked.
“To raise living standards for all, we need to be unapologetic about growing our economy.”
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Jeremy Hunt urges for GP appointment wait time recalculation
The former health secretary has asked for a rethink on the proposed two week target for patients to be seen by a GP.
He told the House of Commons: “If targets were the answer we would have the best access in the world in the NHS because we have more targets than any other healthcare system in the world.
“GPs alone have 72 targets. Adding a 73rd won’t help them or their patients because it is not more targets the NHS needs, it is more doctors.”
Theresa Coffey is yet to respond.
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Stamp duty cut could drive up mortgage payments
It is reported that the government is planning to cut stamp duty as part of the mini budget plan.
A Hargreaves Lansdown senior personal finance analyst has spoken about the effects this could have.
Sarah Coles told The Evening Standard: “No buyer will ever complain about a tax cut, but if the Government was to cut stamp duty it would mean ignoring the fact that the real brake on the property market is a severe shortage of supply.
“Stimulating demand without addressing supply problems would risk more buyers chasing a tiny number of properties, which would push prices up.
“It’s what we saw during the coronavirus-inspired stamp duty holiday.”
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UK economy will enter recession, BoE claims
Senior Sun money journalist Lucy Alderson writes how the the Bank of England has warned that the UK economy will officially enter recession by the end of the month.
A country is in recession when its economy shrinks over a sustained period of time, rather than growing normally.
A slowdown in retail spending and manufacturing output has prompted the Bank of England to say that it expected UK GDP to have fallen by 0.1 per cent in the three months to the end of August – indicating the country is already in recession.
This is below its projections of a 0.4 per cent growth and marks a second successive quarterly decline.
It said there had been a smaller-than-expected bounce back from the Jubilee bank holiday and warned there would be an economic hit from the extra holiday for the Queen’s state funeral.
It takes two quarters of shrinking growth for economists to qualify a downturn as recession.
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‘We have stepped in to stop businesses collapsing’
Chancellor Kwasi Kwarteng says the package has been created to prevent companies collapsing following the cost of living crisis.
He said: “We have stepped in to stop businesses collapsing, protect jobs, and limit inflation.
“And with our plans to boost home-grown energy supply, we will bring security to the sector, growth to the economy and secure a better deal for consumers.”
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Funding for those who ‘are not able to receive support through the Energy Price Guarantee’
The Business Department said: “The Government will also provide an additional payment of £100 to households across the UK who are not able to receive support for their heating costs through the Energy Price Guarantee.
“This might be because they live in an area of the UK that is not served by the gas grid and is to compensate for the rising costs of alternative fuels such as heating oil.”
