London Daily

Focus on the big picture.
Tuesday, Jul 15, 2025

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
Dimon Warns on Fed Independence as Trump Administration Eyes Powell’s Succession
Church of England Removes 1991 Sexuality Guidelines from Clergy Selection
Superman Franchise Achieves Success with Latest Release
Hungary's Viktor Orban Rejects Agreements on Illegal Migration
Jeff Bezos Considers Purchasing Condé Nast as a Wedding Gift
Ghislaine Maxwell Says She’s Ready to Testify Before Congress on Epstein’s Criminal Empire
Bal des Pompiers: A Celebration of Community and Firefighter Culture in France
FBI Chief Kash Patel Denies Resignation Speculations Amid Epstein List Controversy
Air India Pilot’s Mental Health Records Under Scrutiny
Google Secures Windsurf AI Coding Team in $2.4 Billion Licence Deal
Jamie Dimon Warns Europe Is Losing Global Competitiveness and Flags Market Complacency
South African Police Minister Suspended Amid Organised Crime Allegations
Nvidia CEO Claims Chinese Military Reluctance to Use US AI Technology
Hong Kong Advances Digital Asset Strategy to Address Economic Challenges
Australia Rules Out Pre‑commitment of Troops, Reinforces Defence Posture Amid US‑China Tensions
Martha Wells Says Humanity Still Far from True Artificial Intelligence
Nvidia Becomes World’s First Four‑Trillion‑Dollar Company Amid AI Boom
U.S. Resumes Deportations to Third Countries After Supreme Court Ruling
Excavation Begins at Site of Mass Grave for Children at Former Irish Institution
Iranian President Reportedly Injured During Israeli Strike on Secret Facility
EU Delays Retaliatory Tariffs Amid New U.S. Threats on Imports
Trump Defends Attorney General Pam Bondi Amid Epstein Memo Backlash
Renault Shares Drop as CEO Luca de Meo Announces Departure Amid Reports of Move to Kering
Senior Aides for King Charles and Prince Harry Hold Secret Peace Summit
Anti‑Semitism ‘Normalised’ in Middle‑Class Britain, Says Commission Co‑Chair
King Charles Meets David Beckham at Chelsea Flower Show
If the Department is Really About Justice: Ghislaine Maxwell Should Be Freed Now
NYC Candidate Zohran Mamdani’s ‘Antifada’ Remarks Spark National Debate on Political Language and Economic Policy
President Trump Visits Flood-Ravaged Texas, Praises Community Strength and First Responders
From Mystery to Meltdown, Crisis Within the Trump Administration: Epstein Files Ignite A Deepening Rift at the Highest Levels of Government Reveals Chaos, Leaks, and Growing MAGA Backlash
Trump Slams Putin Over War Death Toll, Teases Major Russia Announcement
Reparations argument crushed
Rainmaker CEO Says Cloud Seeding Paused Before Deadly Texas Floods
A 92-year-old woman, who felt she doesn't belong in a nursing home, escaped the death-camp by climbing a gate nearly 8 ft tall
French Journalist Acquitted in Controversial Case Involving Brigitte Macron
Elon Musk’s xAI Targets $200 Billion Valuation in New Fundraising Round
Kraft Heinz Considers Splitting Off Grocery Division Amid Strategic Review
Trump Proposes Supplying Arms to Ukraine Through NATO Allies
EU Proposes New Tax on Large Companies to Boost Budget
Trump Imposes 35% Tariffs on Canadian Imports Amid Trade Tensions
Junior Doctors in the UK Prepare for Five-Day Strike Over Pay Disputes
US Opens First Rare Earth Mine in Over 70 Years in Wyoming
Kurdistan Workers Party Takes Symbolic Step Towards Peace in Northern Iraq
Bitcoin Reaches New Milestone of $116,000
Biden’s Doctor Pleads the Fifth to Avoid Self-Incrimination on President’s Medical Fitness
Grok Chatbot Faces International Backlash for Antisemitic Content
Severe Heatwave Claims 2,300 Lives Across Europe
NVIDIA Achieves Historic Milestone as First Company Valued at $4 Trillion
Declining Beer Consumption Signals Cultural Shift in Germany
Linda Yaccarino Steps Down as CEO of X After Two Years
×