Mini-budget: What is it and how will it affect me?
At a glance: What's in the mini-budget?
(about 1 hour later)
Chancellor Kwasi Kwarteng will later unveil a mini-budget with National Insurance and corporation tax cuts.
Chancellor Kwasi Kwarteng has unveiled what he claims are the biggest tax cuts in a generation, so what is in his mini-budget?
Details of cuts to other taxes such as stamp duty may also be announced as the government tries to limit the impact of soaring energy bills on households.
Income tax
Experts expect it to be the biggest tax-cutting event for 34 years.
Cut in basic rate of income tax to 19% from April 2023
Labour said funding these tax cuts by borrowing would leave people paying more for longer.
Currently, people in England, Wales and Northern Ireland pay 20% on any annual earning between £12,571 to £50,270 (Rates in Scotland are different).
However, the government hopes the tax cuts will boost the economy, increase its revenues and prevent a massive increase in the national debt.
45% higher rate of income tax abolished
What could be in the mini-budget?
One single higher rate of income tax of 40% from April next year
The government has confirmed it will let people keep more of their earnings by cutting National Insurance (NI).
National Insurance
Other measures could include:
Reverse a recent rise in National Insurance (NI) from 6 November
scrapping a planned increase in the amount of tax companies pay on their profits
Workers and employers have paid an extra 1.25p in the pound since April
possible cuts to other taxes, including stamp duty which is paid on house purchases
New Health and Social Care Levy to pay for the NHS will not be introduced
ending the cap on bankers' bonuses
tightening the rules around universal credit
plans to boost economic growth, such as creating low-tax zones around the UK
The announcements will be made by new Chancellor Kwasi Kwarteng, who is in charge of the public finances.
The tax-cutting plans under consideration could cost at least £30bn.
Will there be a stamp duty cut?
There is speculation that the government may cut stamp duty, a tax paid when people buy a property in England and Northern Ireland.
No tax is paid on transactions up to £125,000, and from there it rises in bands to a maximum of 12% for the portion over £1.5m. It raises around £12bn for the Treasury.
The government is thought to be considering a cut, to help first-time buyers and house moves, which would boost economic growth, according to the Times newspaper.
How will National Insurance change?
The government has confirmed it will reverse a recent rise in National Insurance (NI) from 6 November. NI is a tax workers pay on their earnings.
Since 6 April, workers and employers have paid an extra 1.25p in the pound, to help fund the NHS and social care.
NI was set to return to its old rate from April 2023 - to be replaced by a new Health and Social Care Levy at a rate of 1.25%. The levy will now not be introduced.
The NHS will still get the funding it was promised, but government is now expected to borrow the money rather than raise it from tax.
High earners will benefit most, as they pay the most NI. An NI cut won't help pensioners or those on very low income or benefits because they don't pay the tax.
What is national insurance?
What is national insurance?
Which other announcements are expected?
Corporation tax
Corporation tax
This tax is based on the annual profits that a company makes.
Cancel rise in corporation tax which was due to increase from 19% to 25% in April 2023
It was due to increase from 19% to 25% in April 2023, under a plan announced by the previous PM, Boris Johnson.
However, Ms Truss is set to cancel the rise.
Does cutting corporation tax always raise more money?
Does cutting corporation tax always raise more money?
Green levies
Benefits
These charges fund schemes like insulation and renewable energy.
Rules around universal credit tightened, by reducing benefits if people don't fulfil job search commitments
The prime minister has promised to temporarily scrap the levies, saving households about £150 each.
Around 120,000 more people on Universal Credit to be asked to take active steps to seek more work, or face having their benefits reduced
Income tax
A possible cut to the main tax on people's earnings could also be on the cards.
Right now, people in England, Wales and Northern Ireland pay 20% on any annual earning between £12,571 to £50,270. (Rates in Scotland are different).
Universal credit
Mr Kwarteng is expected to announce a welfare shake-up to "get Britain working again".
This is set to include changes to the rules for claiming universal credit, a benefit payment paid to working-age people.
Chancellor set to tighten Universal Credit rules
What is universal credit?
What is universal credit?
How does the government plan to boost growth?
Stamp duty
The government believes its planned tax cuts will help the economy grow more quickly.
Cut to stamp duty which is paid when people buy a property in England and Northern Ireland
It may announce the creation of "special investment zones". Selected locations around the UK would be allowed to relax planning rules and reduce business taxes to encourage investment.
No stamp duty on first £250,000 and for first time buyers that rises to £425,000 - comes into operation today
The mini-budget could also see an end to the cap on bankers' bonuses. This was introduced across the EU in 2014 (when the UK was still a member) following the global financial crisis. Under the current rules, a banker's bonus cannot be higher than their annual salary - unless shareholders agree.
200,000 more people will be taken out of paying stamp duty altogether, government claims
When asked if she would be happy to see bankers getting bigger bonuses, Ms Truss said she wanted to see a growing economy.
Energy
Truss defends plan to boost bankers’ bonuses
Total cost for energy package expected to be around £60bn for the six months from October
Will Liz Truss's economic plans make us richer?
Bankers' bonuses
Can the UK afford to tax less and borrow more?
Rules which limit bankers' bonuses scrapped
Critics argue immediate tax cuts will require the government to borrow more for years to come.
Package of regulatory reforms to be set out later in the autumn
The money, plus interest, will eventually need to be paid back by taxpayers.
Shopping
However, Ms Truss argues faster growth will bring in more money in tax, which will cover the cost of the amount borrowed.
VAT-free shopping for overseas visitors
Warning tax cut 'gamble' will push debt too high
Planned increases in the duty rates for beer, for cider, for wine, and for spirits cancelled
Where does the government borrow billions from?
Why is it being called a mini-budget?
Major decisions about tax and spending are normally made twice a year - in an autumn Budget Statement and a Spring Statement.
Today's announcements are on that kind of scale, covering changes to policies worth billions of pounds, but the new prime minister and chancellor don't want to wait for a full Budget to implement their new economic strategy.
The government has described it as a "fiscal event", and the media has dubbed it a "mini-budget".
The major difference is that it won't be accompanied by an official analysis of its impact on the economy.
That is usually provided by the Office for Budget Responsibility (OBR) - the body which gives independent advice to the government - but the government is refusing to publish the OBR's assessment alongside the mini-budget.
The Treasury said it "remain[s] committed to maintaining the usual two forecasts in this fiscal year, as is required".
An update on the timetable for the next OBR forecast will come during Friday's statement.
A full-scale Budget is expected later this year, but no date has been set.
Treasury refuses to publish UK economic forecast
What are your questions on the cost of living crisis? What would you like to know about the chancellor's mini-budget? Send your questions to yourquestions@bbc.co.uk.
You can also send your questions in the following ways:
WhatsApp: +44 7756 165803
Tweet: @BBC_HaveYourSay
Or fill out the form below
Please read our terms & conditions and privacy policy
If you are reading this page and can't see the form you will need to visit the mobile version of the BBC website to submit your question or comment or you can email us at YourQuestions@bbc.co.uk. Please include your name, age and location with any submission.
