The Chancellor, Kwasi Kwarteng, has confirmed that the additional rate of the 45% income tax for those earning over £150,000 will not be abolished.
Kwarteng advised: “It’s clear that the abolition of the 45% tax rate has become a distraction from our overriding mission to tackle the challenges facing our country. As a result, I’m announcing that we are not proceeding with the abolition of the 45% tax rate”.
In the mini-budget, the Chancellor argued the move would promote growth by allowing people to keep more of their money and encourage investment in the UK. However, this led to claims that it was a tax cut for the wealthiest at a time when the country is facing a cost-of-living crisis caused by inflation and soaring energy bills.
While the 45% tax rate will no longer be abolished, the basic rate tax deduction from 20% to 19% in April 2023 will proceed as planned.