UK Finance Minister Kwasi Kwartengu said the 1.25 percentage point increase in payroll tax that took effect earlier this year will be withdrawn from 6 November.
Kwarteng is set to release a financial statement on Friday, effectively a mini-budget, and is expected to set a growth-boosting agenda for new Prime Minister Liz Truss after being elected Conservative leader earlier this month. There is
“Taxing the road to prosperity never worked. We don’t need to apologize for economic growth to raise living standards for all,” Kwarteng said in a statement.
“Tax cuts are essential for this.”
Kwarteng also said the government would cancel plans to spin off the increased portion of the National Insurance and rename it Health and Social Insurance Contribution, which is due to come into effect in April 2023.
The 1.25 percentage point increase applied to the tax rate levied on both employers and their staff was expected to raise £13bn (A$22bn) annually.
Kwarteng will also abolish the dividend tax rate hike, which was introduced along with the payroll tax hike, from April 2023 to increase contributions from people paid through various channels.
Truss and Kwarteng are relying on tax cuts to stimulate accelerating economic growth. This offsets rising interest payments on the country’s debt and huge spending on packages to help businesses and consumers pay their energy bills.
Truss has pledged to scrap a previously planned corporate tax hike, and the government may also announce a reduction in taxes paid on property purchases on Friday, according to unconfirmed media reports.
The truss introduced national insurance premiums during the campaign to replace former prime minister Boris Johnson as a way to fund a health system struggling to cope with the backlog caused by the COVID-19 pandemic. announced its intention to cancel the increase.
These measures come against a backdrop of severe pressure on households and a deteriorating economic outlook, with energy costs pushing up inflation, falling real wages fueling industrial unrest, and rising interest rates pushing up mortgage payments.
UK government withdraws payroll tax hike
Source link UK government withdraws payroll tax hike