SQUEEZED British workers could bank an extra £250 a year if the basic rate of income tax is cut as expected.
Chancellor Kwasi Kwarteng is considering bringing forward his predecessor’s proposal to knock off a penny – from 20p to 19p in the pound – in his emergency mini budget next week.
The average British worker could get a £250 boost in next week’s mini budget[/caption]
Chancellor Kwasi Kwarteng will make an emergency statement on Friday[/caption]
Rishi Sunak previously said this would take effect in two years, but Prime Minister Liz Truss is said to want to fast-track the move as part of the “punchy” £30billion pack of support measures.
It would mean those on an average income – £38,131 for a full-time role in 2021 – could get a £255 boost.
Tax is only paid on the first £12,570 earned, which leaves £25,561 to be taxed.
Under the current rate of 20 per cent, this works out at £5,112.20.
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But if the basic rate of income tax is slashed from 20p to 19p in the pound, this falls to £4,856.59, meaning an additional £255.61.
An announcement is expected on Friday, but the new rate would not take immediate effect.
The emergency statement will also include further details on the the £150 billion energy bill bailout.
Ms Truss is capping energy prices so the typical family will pay no more than £2,500 for their bills over the next two years.
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She is also expected to help hard-up couples struggling with the rising cost of living.
Millions of couples, where one earns less than £12,570, could save up to £2,500 if she transfers all personal tax allowances between married couples and civil partnerships on low incomes.
This would mean the lower earner can “gift” £1,260 of allowance and save £214 in tax, the Sunday Mirror reports.
Elsewhere, the 1.25 percentage point rise in National Insurance is set to be scrapped, along with a planned rise in corporation tax next year.
Both were flagship promises of the PM’s Tory leadership campaign to let Brits keep more of their cash.
And Ms Truss has drawn up plans to slash taxes for those who work in deprived areas of Britain – known as “investment zones”.
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Businesses that move to and invest in these areas will have their levies cut and be freed from red tape – like eco rules that can block new development.
But the scheme could also see personal taxes – like income and NIC contributions – slashed for people who live and work in these regions.