New chancellor Kwasi Kwarteng is to deliver a mini-budget today in the wake of the cabinet reshuffle and the energy price freeze.
The government has already confirmed some of the announcements, including a stamp duty cut and a reversal of the national insurance hike. This article outlines what’s in store in the mini-budget and how it will affect your finances.
The mini-budget started at 9.30am on 23 September. Keep an eye on this article as we will be updating it as the day goes on.
1. Reversal of April’s national insurance hike
Yesterday the government confirmed plans to reverse the 1.25% rise in national insurance contributions.
In April, national insurance contributions increased by 1.25% for both employees and employers. But this will be scrapped on November 6. This means 28 million workers will have more money in their pockets, averaging at an extra £330 in extra take-home pay over a year.
The increase in the national insurance threshold, which came into force in July, will remain the same.
See how your annual and monthly national insurance bill will change in November.
If you want to see what your take-home pay is now then use our income tax calculator (this tool will shortly be updated to reflect the November change).
2. A stamp duty cut
The government is set to reduce the amount of tax you pay when buying property or land in the UK.
It hopes that cutting stamp duty will stimulate the housing market by encouraging people to buy property.
A stamp duty holiday had been introduced during the pandemic and house prices soared. Liz Truss has previously said that reducing this tax is “critical” to economic growth.
We don’t yet know the details of the stamp duty cut, but you can find out the current thresholds in our guide.
3. Energy price freeze costs
The new chancellor will share further details on how much it will cost to deliver October’s cap on energy prices.
Prime minister Liz Truss has said unit rates and standing charges on default tariffs will be frozen from 1 October for two years. This means a household will pay an average of £2,500 a year for energy usage until 2024.
The previously planned cap had been set to cost households an average of £3,500 for an annual energy bill, so the freeze will save them about £1,000 each year.
It is understood that it will cost £150 billion to deliver the two-year energy price guarantee.
In his mini-budget Kwarteng said the energy package is likely to cost £60 billion for the six months from October.
Read about whether it’s worth switching to a fixed energy deal.