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United Kingdom Abandons Plan for Tax Cuts and Growth Incentives

By: Edward Kowalski, Esq. | 19 Oct 2022

On 23 September 2022, the Chancellor of the Exchequer of the United Kingdom announced a proposal for wide-ranging tax cuts. A complete description of the proposed tax cut and growth plan is available on the government's website. Barely a week after announcing its proposal, BBC News reported an announcement by Chancellor of the Exchequer Kwasi Kwarteng that the government was abandoning its proposal.

One feature of the proposal that generated controversy was a plan to eliminate the highest income tax bracket of 45% on annual income above £150,000 for taxpayers in England, Wales, and Northern Ireland. According to BBC News, the elimination of the top tax bracket would have accounted for approximately £2 billion out of the proposed £45 billion in tax cuts.

The proposal also called for a reduction of the basic income tax rate to 19% in April 2023, which would be one year earlier than planned and was estimated to result in 31 million people getting on average £170 more per year. The plan would have scrapped a planned increase in the corporation tax rate, which would thus remain at 19%. It also included measures to reduce the stamp duty and cancel a scheduled 1.25% increase in the National Insurance levy.

Edward Kowalski, Esq., is Manager, Payroll Information Resources, for the American Payroll Association