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Mini-budget: When is it and what could be in it? Mini-budget: When is it and what could be in it?
(about 2 hours later)
Plans to tackle the cost-of-living crisis will be set out in a mini-budget on Friday.Plans to tackle the cost-of-living crisis will be set out in a mini-budget on Friday.
New Prime Minister Liz Truss has pledged to cut tax and boost the economy.New Prime Minister Liz Truss has pledged to cut tax and boost the economy.
What could be in the mini-budget?What could be in the mini-budget?
The announcements will be made by new Chancellor Kwasi Kwarteng, who is in charge of the public finances.
Measures could include:Measures could include:
letting people keep more of their earnings by cutting National Insurance (NI)letting people keep more of their earnings by cutting National Insurance (NI)
scrapping a planned increase in the tax companies pay on their profitsscrapping a planned increase in the tax companies pay on their profits
possible cuts to other taxes, including stamp duty which is paid on house purchasespossible cuts to other taxes, including stamp duty which is paid on house purchases
ending the cap on bankers' bonusesending the cap on bankers' bonuses
plans to boost economic growth, such as creating low-tax zones around the UKplans to boost economic growth, such as creating low-tax zones around the UK
The chancellor is also expected to set out how much it will cost the government to limit energy bill increases for households and businesses. The announcements will be made by new Chancellor Kwasi Kwarteng, who is in charge of the public finances.
The total cost of cutting taxes will be at least £30bn.The total cost of cutting taxes will be at least £30bn.
What changes are expected to National Insurance?What changes are expected to National Insurance?
Ms Truss has pledged to undo the recent increase in National Insurance (NI) - a tax workers pay on their earnings. Ms Truss has pledged to undo a recent increase in National Insurance (NI) - 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 government's NHS and social care plan. Since 6 April, workers and employers have paid an extra 1.25p in the pound, to help fund the NHS and social care.
Under the previous plan, NI was due to return to its old rate from April 2023, when a new Health and Social Care Levy would be introduced, at a rate of 1.25%. However, the government could decide to scrap the levy before it's introduced. 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%.
If the cut goes ahead, higher earners' pay will benefit more as they pay the most NI. However, the government could now decide to scrap the levy before it's introduced.
An NI cut won't help pensioners or those on low income or benefits because they don't currently pay the tax. If that happens, higher earners will benefit most, as they pay the most NI. An NI cut won't help pensioners or those on low income or benefits because they don't pay the tax.
What is national insurance?What is national insurance?
Which other taxes could be cut?Which other taxes could be cut?
A change in stamp duty - a tax paid on property purchases - is thought to be under consideration. Corporation tax
Corporation tax is based on the annual profits that a company makes. This tax is based on the annual profits that a company makes.
It was due to increase from 19% to 25% in April 2023, under a plan announced by the previous PM, Boris Johnson.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.However, Ms Truss is set to cancel the rise.
She has also promised to temporarily scrap "green levies", saving households about £150 each. These charges fund programmes like insulation and renewable energy. Green levies
A possible cut in income tax could also be on the cards. Right now, people pay 20% on any annual earning between £12,571 to £50,270. These charges fund schemes like insulation and renewable energy.
The prime minister has promised to temporarily scrap the levies, saving households about £150 each.
Income tax
A possible cut on the main tax on people's earnings could also be on the cards.
Right now, people pay 20% on any annual earning between £12,571 to £50,270.
Does cutting corporation tax always raise more money?Does cutting corporation tax always raise more money?
Will Liz Truss's economic plans make us richer?Will Liz Truss's economic plans make us richer?
New Chancellor Kwasi Kwarteng will deliver the mini Budget
How about boosting growth?How about boosting growth?
The mini-budget could also see an end to the cap on bankers' bonuses. The cap was introduced across the EU in 2014 (when the UK was still a member) following the global financial crisis. The mini-budget could also see an end to the cap on bankers' bonuses. It was introduced across the EU in 2014 (when the UK was still a member) following the global financial crisis.
When asked if she would be happy to see bankers getting bigger bonuses, Ms Truss said she wanted to see a growing economy.When asked if she would be happy to see bankers getting bigger bonuses, Ms Truss said she wanted to see a growing economy.
The government may also announce the creation of "special investment zones". Certain locations could be allowed to relax planning rules and reduce business taxes to encourage investment.The government may also announce the creation of "special investment zones". Certain locations could be allowed to relax planning rules and reduce business taxes to encourage investment.
Truss defends plan to boost bankers’ bonusesTruss defends plan to boost bankers’ bonuses
Will we hear more about energy prices?
The government has already said that a typical household can expect to pay about £2,500 a year in energy bills for two years from October. The energy cap had been due to rise to £3,549 for a typical household.
Ministers have also announced a separate support package to cut energy bills for businesses by around a half of their predicted level this winter.
More details about what the schemes will cost and how they will be funded are due to be unveiled. Experts have previously suggested the support could cost as much as £150bn.
How will the energy cap for businesses work?
Can the UK afford to tax less and borrow more?Can the UK afford to tax less and borrow more?
Critics, including Ms Truss' Conservative leadership rival Rishi Sunak, argue immediate tax cuts will lead to higher borrowing.Critics, including Ms Truss' Conservative leadership rival Rishi Sunak, argue immediate tax cuts will lead to higher borrowing.
Borrowing is when governments raise money by selling bonds - usually to international investors.
The money, plus interest, will eventually need to be paid back by taxpayers.The money, plus interest, will eventually need to be paid back by taxpayers.
However, Ms Truss argues tax cuts will help the economy grow - bringing in more revenue which will cover the cost of the amount borrowed. However, Ms Truss argues tax cuts will help the economy grow - bringing in more money which will cover the cost of the amount borrowed.
Where does the government borrow billions from?Where does the government borrow billions from?
Why is it being called a mini-budget?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.Major decisions about tax and spending are normally made twice a year - in an autumn Budget Statement and a Spring Statement.
The independent Office for Budget Responsibility (OBR) normally published an analysis of the measures contained in each of the statements. This sets out the cost of new policies, how much tax will be raised and what the government's decisions mean for the economy. The Office for Budget Responsibility (OBR) - which gives independent advice to the government - normally publishes its analysis of these statements. It sets out the cost of new policies, how much tax will be raised and what it means for the economy.
However, the government is refusing to publish the OBR's independent assessment alongside the mini-budget on Friday. However, 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".The Treasury said it "remain[s] committed to maintaining the usual two forecasts in this fiscal year, as is required".
A full-scale Budget is expected later this year, but no date has been set.A full-scale Budget is expected later this year, but no date has been set.
Treasury refuses to publish UK economic forecastTreasury refuses to publish UK economic forecast