Martin Lewis gives good news for workers earning less than £50,000
MARTIN Lewis has revealed positive news for households earning £50,000 or less following the government’s mini-budget.
The MoneySavingExpert.com founder took to Twitter to offer an explainer on Chancellor Kwasi Kwarteng’s raft of economic reforms.
The government announced a permanent stamp duty cut, removal of the cap on bankers’ bonuses and a 1p cut to the basic rate of income tax, among other measures.
It is hoped the new reforms will stimulate growth in the UK economy after years of stagnation.
And consumer champion Lewis said the cut to income tax was good news for those earning roughly £50,000 or less.
That’s because the basic rate tax threshold has dropped to 19% from 20%, which impacts those earning between £12,571 and £50,270 – around 31million people according to government estimates.
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However, Lewis added: “For anyone earning £50,000 and over, you don’t really get any more gain.
“The gain is really on the income between £12,570 and £50,000.”
The change means the average worker will save £170 on average next year.
Kwasi Kwarteng’s announcement came yesterday, September 23, as millions of households across the UK grapple with the cost of living crisis.
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Food prices have shot up in recent months, and petrol prices remain high, despite falling significantly in the last few weeks.
What else did the government announce?
Stamp duty cut
The government announcement a permanent stamp duty cut yesterday, September 23.
Stamp duty land tax (SDLT) is a lump sum payment you have to make if you are buying a property over a certain financial threshold.
The rate a buyer has to pay depends on the price, type of property and whether or not they already own a home.
Previously, first-time buyers did not have to pay tax on homes costing less than £300,000.
After the government’s announcement, that figure has now risen to £425,000.
Under the previous system, no stamp duty was paid on the first £125,000 of all property purchases, but the government has doubled that to £250,000.
The maximum value of a property on which first-time buyer’s relief can be claimed has also increased from £500,000 to £625,000.
National Insurance contributions cut
Millions of households will save £330 a year on average after the government announced a cut to National Insurance (NI) contributions.
A 1.25% increase to NI will be scrapped from November 6.
The Chancellor said the tax cut would impact 28 million people.
Bankers bonuses ditched
Mr Kwarteng axed the cap on bonuses for city bankers as part of the mini-budget.
The Chancellor claimed scrapping the cap would give the British economy a much-needed boost.
A limit on bankers’ bonuses was introduced by the EU following the 2007-2008 financial crash.
Before the change, bankers could only earn less than 200% of their salary as an added bonus, but now that limit has been ditched
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Among the income tax cut, stamp duty cut and ditching of banker’s bonuses, the Chancellor also announced:
- Beer price rise cancelled
- Boost for self employed as complex tax rules axed
- Low-tax investment zones for business
- Corporation tax hike scrapped