MILLIONS of households will miss out on savings from a 1p cut to the basic rate of income tax next year.
Around 31million people were set to save £170 on average, and up to £377 for the highest earners.
The previous Chancellor, Kwasi Kwarteng announced in last month's mini-Budget that he would cut the basic rate of income tax to 19p in April 2023.
But Jeremy Hunt tore Liz Truss' mini-Budget to shreds today in a bombshell statement.
And Jeremy Hunt has now confirmed that the cut to income tax won't take place and the basic rate will remain at 20% indefinitely.
Before Kwasi Kwarteng's mini-Budget, workers in England, Northern Ireland and Wales were originally set to see the basic rate of income tax fall by one percentage point from 20% to 19% from April 2024.
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But now Jeremy Hunt has ruled out any cut to income tax for the foreseeable.
It comes as the Chancellor also:
- Reversed duty cuts on beer, cider, wine and spirits
- Said that the Energy Price Guarantee will only last until April
- Kept the cut to National Insurance
- Reaffirmed the cut to stamp duty
But the cancellation of the cut to income tax means that the average taxpayer will now miss out on £170 in savings next year.
Data provided by Hargreaves Lansdown suggests that the 1p cut to the basic rate of income tax would have saved those earning £15,000 a year £24.30 a year.
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Those earning £25,000 a year would have saved £124.30 and workers with incomes of £35,000 a year would save £224.30.
Those earning £50,000 a year would have saved £374.
Workers only start paying income tax once they start earning over the personal allowance – which currently stands at £12,570.
Any income earned up to £12,570 is tax-free.
However, this amount may be bigger if you claim certain allowances including, blind person’s allowance, marriage allowance and child tax credit.
Right now all earnings between £12,570 and £50,270, are liable to pay the basic income tax rate of 20%.
Wages of £50,271 and above are taxed at the higher rate of 40%.
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And the additional rate of income tax, which applies to earnings above £150,000, is 45%.
Data provided by Blick Rothenberg suggests that the 1p cut to the basic rate of income tax will save those earning £15,000 a year £24.30 a year.
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