Chancellor Jeremy Hunt has revealed tax rises and spending cuts worth billions of pounds aimed at mending the nation’s finances.
Taxation and wages
- £10.42 an hour is the new minimum wage for people over 23. This is an increase of £0.92.
- On personal tax, the threshold at which the 45% rate becomes payable moved from £150,000 to £125,140. Those earning £150,000 or more will pay just over £1,200 more a year.
- Income tax personal allowance and higher rate thresholds frozen for further two years, until April 2028
- Main National Insurance and inheritance tax thresholds also frozen for further two years, until April 2028
- Tax-free allowances for dividend and capital gains tax also due to be cut next year and in 2024
- Household energy price cap extended for one year beyond April but made less generous, with typical bills capped at £3,000 a year instead of £2,500
- Households on means-tested benefits will get £900 support payments next year
- £300 payments to pensioner households, and £150 for individuals on disability benefit
- Windfall tax on profits of oil and gas firms increased from 25% to 35% and extended until March 2028
- New “temporary” 45% tax on companies that generate electricity, to apply from January
The economy and public finances
- The Office for Budget Responsibility judges UK to be in recession, meaning the economy has slowed for two quarters in a row
- It predicts growth for this year overall of 4.2%, but size of the economy will shrink by 1.4% in 2023
- Growth of 1.3%, 2.6%, and 2.7% in 2024, 2025 and 2026
- UK’s inflation rate predicted to be 9.1% this year and 7.4% next year
- Unemployment expected to rise from 3.6% to 4.9% in 2024
- Government will give itself five years to hit debt and spending targets, instead of three years currently