[Politics] Mini-budget: When is it and what could be in it?

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Plans to tackle the cost-of-living crisis will be set out in a mini-budget on Friday.

 

New Prime Minister Liz Truss has pledged to cut tax and boost the economy.

 

What could be in the mini-budget?

 

Measures could include:

 

• letting people keep more of their earnings by cutting National Insurance (NI)
• scrapping a planned increase in the tax companies pay on their profits
• possible cuts to other taxes, including stamp duty which is paid on house purchases
• ending the cap on bankers' bonuses
• plans to boost economic growth, such as creating low-tax zones around the UK
• The announcements will be made by new Chancellor Kwasi Kwarteng, who is in charge of the public finances.
• The total cost of cutting taxes will be at least £30bn.

 

What changes are expected to National Insurance?

 

Ms Truss has pledged to undo a recent increase in National Insurance (NI) - a tax workers pay on their earnings.

 

Since 6 April, workers and employers have paid an extra 1.25p in the pound, to help fund the NHS and social care.

 

NI was set to return to its old rate from April 2023 - to be replaced by a new Health and Social Care Levy at a rate of 1.25%.

 

However, the government could now decide to scrap the levy before it's introduced.

 

If that happens, higher earners will benefit most, as they pay the most NI. An NI cut won't help pensioners or those on low income or benefits because they don't pay the tax.

 

 

Which other taxes could be cut?

 

• Corporation tax

 

This tax is based on the annual profits that a company makes.

It was due to increase from 19% to 25% in April 2023, under a plan announced by the previous PM, Boris Johnson.

However, Ms Truss is set to cancel the rise.

 

• Green levies

 

These charges fund schemes like insulation and renewable energy.

The prime minister has promised to temporarily scrap the levies, saving households about £150 each.

 

• Income tax

 

A possible cut on the main tax on people's earnings could also be on the cards.

Right now, people pay 20% on any annual earning between £12,571 to £50,270.

 

How about boosting growth?

 

The mini-budget could also see an end to the cap on bankers' bonuses. It was introduced across the EU in 2014 (when the UK was still a member) following the global financial crisis.

 

When asked if she would be happy to see bankers getting bigger bonuses, Ms Truss said she wanted to see a growing economy.

 

The government may also announce the creation of "special investment zones". Certain locations could be allowed to relax planning rules and reduce business taxes to encourage investment.

 

Can the UK afford to tax less and borrow more?

 

Critics, including Ms Truss' Conservative leadership rival Rishi Sunak, argue immediate tax cuts will lead to higher borrowing.

 

The money, plus interest, will eventually need to be paid back by taxpayers.

 

However, Ms Truss argues tax cuts will help the economy grow - bringing in more money which will cover the cost of the amount borrowed.

 

Why is it being called a mini-budget?

 

Major decisions about tax and spending are normally made twice a year - in an autumn Budget Statement and a Spring Statement.

 

The Office for Budget Responsibility (OBR) - which gives independent advice to the government - normally publishes its analysis of these statements. It sets out the cost of new policies, how much tax will be raised and what it means for the economy.

 

However, the government is refusing to publish the OBR's assessment alongside the mini-budget.

 

The Treasury said it "remain committed to maintaining the usual two forecasts in this fiscal year, as is required".

 

A full-scale Budget is expected later this year, but no date has been set. Source.