This morning, the Chancellor Kwasi Kwarteng has announced the Government’s Growth Plan. He set out that for too long growth could have been higher, making it harder to pay for public services and requiring taxes to rise. This plan sets out a new approach focused on economic growth.
Every policy decision will be tested against a defining test of achieving a growth rate of 2.5 per cent, ensuring that this trend growth rate remains sustainable.
As part of this Growth Plan, the following announcements have been made:
- Cutting the basic rate of income tax to 19p for 31 million people. This brings a cut forward by one year to April 2023.
- Cutting stamp duty permanently, by doubling the nil-rate band to £250,000 (from £125,000), while increasing the nil-rate band for first time buyers to £425,000 (from £300,000). The value of the property which first-time buyers can claim relief will also be raised to £625,000 from £500,000. This will mean that 200,000 people are taken out of paying stamp duty altogether, effective from today.
- Abolishing the additional rate income tax altogether from 2023. This 45p rate, which is already higher than the top rate of G7 countries like the US and Italy. Abolishing this will mean we have a much simpler and more competitive economy.
- Cutting National Insurance contributions by 1.35 per cent, which will save the average worker £330 a year more. This will affect 28 million people.
- Corporation tax will be kept at 19 per cent, driving economic growth by encouraging business in the UK. This scraps plans to increase UK Corporation Tax from 19 per cent to 25 per cent.
- Simplifying IR35 rules to make it easier to remove unnecessary burdens for business. This will repeal 2017 and 2021 reforms, while keeping compliance under close review.
- Introducing VAT-free shopping for overseas visitors. This will boost retail and hospitality.
- Freezing alcohol duty for beer, cider, wine and spirits next year, while continuing important reforms which modernise our alcohol duty system.
Other announcements include:
- Stopping strike action from slowing down Britain by introducing Minimum Service Levels for transport services in Great Britain, ensuring such strike action cannot derail economic growth.
- The Government will also publish a list of infrastructure projects that will be accelerated, from transport to energy to telecoms, to allow these projects to help grow our economy.
- Increasing housing supply to build a nation of homeowners. Planning reforms will be brought in, and the Government will increase the disposal of surplus Government land to build new homes.
Full details of The Growth Plan can be seen here on Gov.uk: The Growth Plan 2022 - GOV.UK (www.gov.uk)