New Chancellor Jeremy Hunt delivered an economic statement today to try and stabilise the markets.
It comes after Prime Minister Liz Truss and former Chancellor Kwasi Kwarteng delivered a mini-budget several weeks ago which resulted in economic turmoil. On Friday, Mr Kwarteng left his role as Chancellor after only 38 days in the office and was swiftly replaced by Mr Hunt.
Following his appointment, Mr Hunt has steered economic policy away from the low-tax-focused approach taken by his predecessor. He previously warned that taxes will have to go up while spending would rise less quickly than originally planned.
Today, Mr Hunt stressed that the government is responsible for doing what is necessary to bring about economic stability He noted that it's vital for businesses making investment decisions, and for families concerned about jobs, mortgages and the cost of living crisis currently sweeping across the country.
The Chancellor announced a wave of U-turns today, backtracking on some of the major policies introduced by his predecessor. Among these include a reversal of almost all of the tax measures previously laid out.
It includes cutting the basic rate of income tax to 19 per cent, cutting dividends tax by 1.25 percentage points, and repealing the 2017 to 2021 reforms to the off-payroll working rules. However, Mr Hunt has not reversed all the policies set out by his predecessor.
What mini-budget policies will remain?
Among his wave of reversals brought in today, Mr Huny notably left out any changes to the reversal of the National Insurance increase and the Health and Social Care Levy, as well as cuts to Stamp Duty Land Tax.
National Insurance increase and the Health and Social Care Levy
Changes to National Insurance contributions will still go ahead from April 6, 2023. It means that National Insurance contribution rates will dip to 2021 - 2022 rates with the new levy becoming a separate tax of 1.25 per cent.
According to the government, the separate levy of 1.25 per cent will apply to the same amounts for the following National Insurance contribution classes:
- Class 1 that are above the primary and secondary thresholds
- Class 1A and Class 1B for employers
- Class 4 for those self-employed
Stamp Duty Land Tax
The cuts will change the amount that someone can pay for residential property ebfore they become liable to Stamp Duty Land Tax, while maintaining the higher rate of 3 per cent on additional dwellings. The previous threshold was doubled by Mr Kwarteng to £250,000.
For first-time buyers, the threshold also increased from £300,000 to £425,000. Therefore anyone buying a property under £250,000 and any first-time buyers purchasing a property under £425,000 will not have to pay stamp duty tax.
The new threshold was brought in by Mr Kwarteng to try and reduce the extra thousands of pounds added onto the buying process when purchasing a new property.
Read next:
Drivers hit with 7p rise in petrol and diesel prices due to pound's decline
'I'd rather go to jail than pay £100 fine for cycling around my town'
Blood shortage emergency: In Manchester, there's plenty of donors but not enough staff
Bank of England governor warns of further interest rates rise amid mortgage crisis
Jeremy Hunt says taxes will rise as he gets 'clean slate' on disastrous mini-budget
