London Daily

Focus on the big picture.
Friday, Sep 25, 2026

Mini-budget: What it means for you and your finances

Mini-budget: What it means for you and your finances

Described as a mini-budget, or a fiscal event, there was enough affecting your finances in this statement to fill any full-scale Budget.

We did not receive any independent forecasts as we would normally expect, but we already know some of the impact on the pounds and pence in your pocket.

So, with the cost of living rising, these are the key announcements from Chancellor Kwasi Kwarteng which will affect you.


Income tax cut will come earlier


A cut in the basic rate of income tax will be brought forward by a year.

In the Spring, Rishi Sunak, when chancellor, pledged to reduce the basic rate of income tax by 1p in the pound before the end of the Parliament in 2024.

Now Mr Kwarteng says this will now happen in April 2023, which the government says will benefit 31 million people with an average £170 a year reduction in tax.

However, people are facing higher bills and the higher cost of borrowing, and more people have been drawn into paying higher tax bands, because the thresholds have been frozen.

What is eye-catching is that the chancellor has pledged to abolish the 45% additional rate of tax, which is paid by people who earn more than £150,000 a year, in April 2023. That is a tax saving of nearly £3,000 a year for somebody earning £200,000 annually.

It means the 40% higher rate, for earnings of over £50,270, will be the top rate.

Income tax bands are different in Scotland, where there are five different rates.


Potential for benefits being cut


Anyone on the major benefits - such as universal credit - should expect a rise in what they receive, owing to the link to inflation. However, that will not come until April. Many charities have called for that rise to come earlier.

Mr Kwarteng instead concentrated on a plan to cut benefits for those who do not adequately search for work.

He said that would mean 120,000 more people on universal credit "take active steps to seek more and better-paid work, or face having their benefits reduced".

There would be extra support for unemployed people aged over 50 to help get them into work.


How will the stamp duty change affect home buying?


Stamp duty holidays are often used by governments to encourage activity in the housing market. The theory is that people also spend on things like home improvements and fixtures and fittings after they move, thus boosting economic growth.

The tax affects people planning to buy a property. It only applies in England and Northern Ireland.

The chancellor said that, instead of a stamp duty holiday, there would be a permanent cut in stamp duty.


In detail, it means, the threshold of how much a property has to cost before stamp duty is paid has been changed from £125,000 to £250,000.

First-time buyers currently pay no stamp duty on the first £300,000, and that will be raised to £425,000. Discounted stamp duty for first-time buyers will apply up to £625,000, an increase from the previous £500,000.

Homebuyers in London and the South East of England will benefit the most from this. They pay 65% of all stamp duty as prices are higher and the tax is particularly focused on homes of more than £500,000, according to research by Zoopla. Three-quarters (76%) of stamp duty came from homes priced at more than £500,000.


National Insurance will boost pay packets


Although announced a day in advance, the reversal of an increase in National Insurance loomed large in this mini-budget.

It will see the 1.25% rise in National Insurance cancelled on 6 November.

The Treasury said the change would save nearly 28 million people an average of £330 per year.


However, the impact varies considerably depending on what you earn, as there are weekly thresholds for National Insurance. There is nothing to pay on the first £242 earned per week, then it is 13.25% on earnings between £242.01 and £967, and 3.25% on the rest.

That means, in general, people who earn more than £12,570 a year pay National Insurance, and the more they earn, the more they will benefit from this change.

For example, somebody earning £20,000 will save about £93 a year, and somebody earning £100,000 will save £1,093, compared to now.

The increase in National Insurance was designed to raise money for health and social care, which the government says will now be funded through general taxation.

By taking income tax and National Insurance cuts together, someone earning £20,000 a year will save £167 a year, those earning £40,000 will save £617, someone getting £60,000 will save £969, and person on £100,000 a year will get an extra £1,469, according to accountancy firm EY.


What about the so-called sin taxes?


Planned increases in the duty rates for beer, cider, wine and spirits have been cancelled.


What was the backdrop to this mini-budget?


Grocery prices and energy bills are soaring, so much so that there has been a huge package of support to protect people, to a degree, from unmanageable gas and electricity bills.

Despite that help, median earners were expecting to see a 3% (£600) fall in real income this year, according to the Institute for Fiscal Studies.

Household support will help make a recession, which the Bank of England says we may already be in, not as deep as previously expected.

Newsletter

Related Articles

0:00
0:00
Close
Police Arrest Far-Right Activist After Migrant Dinghy Slashed in English Channel
Synthetic Opioids Drive Renewed Rise in Scotland’s Drug Deaths
Reported Assaults on Britain’s Railways Rise 20% in a Year
Vistry Cuts Profit Forecast as Losses Weigh on UK Housebuilder
TikTok Drops Appeal and Accepts £12.7 Million UK Data Protection Fine
Russell Group Urges UK Government to Drop Proposed International Student Levy
Legal & General Plans to Cut 1,000 Jobs by Mid-2027
UK Health Bill Would Remove Independent Governors From NHS Foundation Trusts
BMA Raises Patient Safety Concerns Over Advanced Practitioners Filling Doctor Rotas
UK’s Largest AI Supercomputer Delayed by Power Supply Constraints
NHS Orders Security Cameras in Neonatal Units Following Thirlwall Inquiry
Post-Brexit Trade Barriers Cost UK Economy Up to £6.5 Billion a Year, Analysis Says
UK Parliament Launches Inquiry Into Bank of England Monetary Policy Independence
Global Bond Selloff and Higher Oil Prices Narrow UK Budget Options
UK Prime Minister Andy Burnham Addresses UN and Holds First Meeting With Donald Trump
Royal Navy Commandos Complete Maritime Operations Training With US Navy SEALs
Vistry Profit Warning Adds to Concerns Over UK Housebuilding Conditions
UK Commits £343 Million to Major Expansion of Community Mental Health Services
Five Eyes Partners Back UK-Led Campaign Against Global Fraud Networks
UK Businesses Gain Full Access to £13 Trillion CPTPP Trading Bloc
UK Allocates Nearly £10 Billion for Council, Social and Affordable Housing
Chancellor John Healey Unveils Deregulation Drive to Accelerate UK Investment and Growth
Prime Minister Andy Burnham Sets Out Post-Brexit Foreign Policy Vision at United Nations
UK Reassesses Chagos Arrangements as Burnham Seeks New Path on Diego Garcia
Key Trends to Watch
Government’s “Buy British” Procurement Push Targets More Domestic Jobs and Industrial Capacity
Scotland Launches Four-Year Flood Resilience Programme With New Community Funding
Low-Income Renters Face Record Gap Between Housing Support and Private Rents
UK and US Test Torpedo Launch From British Undersea Drone in Defence Technology Milestone
Britain Pushes Artificial Intelligence Security Onto United Nations Security Council Agenda
Treasury Committee Defends Office for Budget Responsibility Independence Amid Fiscal Pressure
Scotland Records Eleven Per Cent Rise in Drug-Use Deaths as Cocaine and Nitazenes Drive Concern
Welsh Government Sets Four-Year Programme Around Health, Living Costs, Jobs and Housing
Study Finds Most People With High Blood Pressure in England Remain Undiagnosed
Britain Plans First National Workplace Health System to Tackle Economic Inactivity
England to Introduce Vocational GCSEs in Major Secondary Education Reform
UK Elevates Climate and Nature Risks to National Security Priority
Andy Burnham and Donald Trump Put Trade at Centre of First Major Bilateral Meeting
Andy Burnham and Ursula von der Leyen Push Ahead With Closer UK-European Union Economic Ties
UK Government Borrowing Jumps to Eighteen Point Three Billion Pounds Ahead of October Budget
Piddington Residents Back Symbolic Independence Vote Over Asylum Accommodation Plan
Reform UK Names Helen Jenner as New Leader in Wales
England Expands Devolution of Transport, Skills and Economic Development Powers
Liberal Democrats Call for Temporary Fuel Duty Cut to Ease Cost-of-Living Pressure
UK Farmers Warn Drought Has Caused Crop Failures and Reduced Harvests
UK Fixed Mortgage Rates Approach 6% as Lenders Raise Borrowing Costs
YouGov Poll Puts Labour at 23% With Conservatives and Reform UK on 21%
Badenoch Presses Burnham to Increase Defence Spending and Cut Welfare Costs
UK Military Figures Warn of Growing Threats to Undersea Infrastructure and National Readiness
BP Moves Ahead With Sale of UK North Sea Oil and Gas Business
×