Chancellor reverses cut to 45% tax rate

The Chancellor, Kwasi Kwarteng has announced that the 45% Income Tax top tax rate will remain in place from next April. He admitted that his un-costed mini-budget proposal had become a “a massive distraction”.

The financial markets and the value of the Pound have been in turmoil since the Chancellor made his fiscal statement just over a week ago. The prime reasons for this lack of stability were that in a time of rising inflation, tax cuts for higher rate taxpayers were seen as the wrong thing to do. In addition, the statement was made ahead of any of the anticipated annual reports from the independent Office of Budget Responsibility.

The Conservative party are having their annual conference in Blackpool this week. MPs will without doubt be putting a lot of pressure on Prime Minister Liz Truss and her new chancellor to provide vital reassurance about the viability of their plans for growing the UK economy. Further announcements may well be made when the OBR publishes its reports in early November.