UK ‘swings’ from scrapping 45p tax to lowering of top rate threshold

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There was bad news for highest earners on Thursday for Hanseller Jeremy Hunt as he announced a cut in the top tax rate from £150,000 to £125,140.

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No surprise though, it was only a few weeks ago when then-Chancellor Kwasi Kwarteng stood in the House of Commons to announce plans to slash the top tax rate as part of a radical bid to spur growth. Was of

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The move was widely criticized and Liz Truss’s administration, before it fell apart, was eventually forced into an embarrassing U-turn on the outcry.

Mr Hunt, who was drafted in as Mr Kwarteng’s replacement and placed under Rishi Sunak, said on Thursday he was asking “more from those who have more”.

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The move will reduce the threshold for the 45p additional rate of tax from £150,000 to £125,140 as part of a wider package of “tough” tax increases and spending cuts.

Economists and analysts pointed to a dramatic change in economic thinking in the space of just weeks on Thursday, as the Institute for Fiscal Studies (IFS) said a change to the 45p extra rate cap would increase the number of top-payers by around 350,000. rate of, about one million in total.

“The shift from quasi-kwarteng’s fiscal loosening to greater fiscal tightening in a matter of months is a belated recognition of some harsh fiscal realities,” said Paul Johnson, director of the IFS.

Torsten Bell, chief executive of the Resolution Foundation, said: “The UK government has gone from announcing the biggest tax cut in 50 years to the biggest tax cut since 2010 in just a few weeks. Today provided a more reality-based version.

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