In his Growth Plan statement on 23rd September, the Chancellor announced plans to cut the basic rate of income tax by 1% from 6th April 2023. However, on 17th October, the Government reversed course and the 1% cut income tax will not now go ahead.
Basic rate taxpayers
The Government had originally planned to introduce a 1% reduction in the basic rate of income tax in April 2024, however it was announced in the Growth Plan that the reduced rate of 19% will apply from April 2023, one year earlier than expected.
The current basic rate of income tax of 20% has applied since 2008/09 and following the announcement on 17th October, will remain at 20% for the foreseeable future.
Additional rate taxpayers
As part of the Government’s plan to reduce taxes, it had planned to also remove the additional rate of income tax of 45% from April 2023.
However, on 3rd October the plans were dropped following widespread outcry from the public and MPs, with the then Chancellor Kwasi Kwarteng stating: “The abolition of the 45pc rate had become a distraction from our mission to get Britain moving.
“Our focus now is on building a high-growth economy that funds world-class public services, boosts wages, and creates opportunities across the country.”