Millions of workers will be paying less Income Tax from April next year.
The Chancellor made sweeping changes to taxation during his mini-Budget last week.
The key change to the basic rate of income tax is the 1p reduction to 19 per cent. This was previously announced by former Chancellor Rishi Sunak and scheduled to become law in 2024, but will now take place from April 2023.
In addition, the top rate, or Additional Rate of 45 per cent currently paid by those earning in excess of £150,000, will be scrapped altogether.
That means that those with an annual income above £50,270 will be taxed at 40 per cent which becomes the highest rate of Income Tax.
With rates of zero per cent, 19 per cent and 40 per cent, the Chancellor says the changes represent one of the simplest rate structures within the OECD.
The cut will apply to the basic rate which applies to:
The last cut in the basic rate of Income Tax was in 2008/09.
The Government says:
In the case of Gift Aid, it will remain at 20 per cent until 2027 when it joins the new rate of 19 per cent.
The Government says this will benefit 70,000 charities and is worth over £300 million.
According to Government figures, an average, basic rate taxpayers will be £130 better off, and higher rate taxpayers will be £360 better off, in 2023-24 thanks to the cut to the basic rate.
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