Chacellor Kwasi unveils tax cuts

Chancellor Kwasi Kwarteng has unveiled the biggest package of tax cuts in 50 years, as he hailed a "new era" for the UK economy. Income tax and the stamp duty on home purchases will be cut and planned rises in business taxes have been scrapped.
 
Kwarteng said a major change of direction was needed to kick start economic growth. But Labour said it would not solve the cost-of-living crisis and was a "plan to reward the already wealthy". It comes as the Bank of England warns the UK may already be in recession.
 
The pound sank to a fresh 37-year low against the dollar as the chancellor gave his statement. In a departure from Boris Johnson's economic policies, Kwarteng has scrapped plans to push up taxes to pay for public services, with the aim of boosting economic growth.
 
In a Commons statement, being dubbed a mini-budget, he said high tax rates "damage Britain's competitiveness", reducing the incentive to work and for businesses to invest. He announced that the basic rate of income tax would be reduced by one percentage point to 19% in April - one year earlier than planned.
 
He also unveiled a cut to the top rate of income tax from 45% to 40%, meaning the UK will have a single higher rate from April. Kwarteng fulfilled promises to reverse the rise in National Insurance payments introduced by Johnson to pay for social care and tackle the NHS backlog. He confirmed a planned corporation tax increase from 19% to 25% would also be scrapped.
 
Government borrowing will increase by £72bn as a result of the announcements, according to the Treasury. The changes to income tax do not apply in Scotland but cuts to corporation tax and national insurance are UK-wide. Paul Johnson, director of the independent Institute for Fiscal Studies, said the statement amounted to the biggest tax cuts since the 1972 Budget, with the cuts 50% bigger than had been expected. He said that the UK could be borrowing £120bn in three years' time to afford the measures.