Kwasi Kwarteng is set to deliver a tax cut bonanza in this week’s mini budget

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New Chancellor Kwasi Kwarteng is set to deliver a tax cut bonanza in this week’s mini budget and could speed up the income tax cut by 1p

  • The new Chancellor will present an emergency budget to Parliament on Friday
  • Kwasi Kwarteng to unveil ‘hard-hitting’ £30bn package of measures
  • The budget is also expected to reverse Rishi Sunak’s National Insurance hike

Chancellor Kwasi Kwarteng plans to announce a tax cut bonanza in this week’s Emergency Mini Budget, which could include accelerating a planned 1p cut in income tax.

Whitehall sources said Mr Kwarteng was drawing up a ‘really impactful’ £30bn package of measures which will reflect Prime Minister Liz Truss’ desire to make a ‘momentum for growth’ in time for the next general election , which should hold. by fall 2024.

As well as Ms Truss’ promises to roll back former Chancellor Rishi Sunak’s recent National Insurance increase and freeze corporation tax, Mr Kwarteng is also planning to present Mr Sunak’s plan for a 1p reduction in the basic income tax rate from 20p to 19p in the book.

Mr Sunak said in March that it would come into effect in two years.

The sources said Mr Kwarteng was also planning a ‘surprise knockout measure’ – described as a ‘real rabbit out of the hat’ – which was the subject of extensive and secret discussions between Ms Truss and her chancellor.

Chancellor Kwasi Kwarteng is due to present an emergency budget to the Commons on Friday

The emergency declaration, which Mr Kwarteng is due to deliver to the Commons on Friday, will be part of one of the most significant budget interventions by a British government in the past century.

It comes on top of the £150billion cap on energy prices, announced in the first week of the Truss administration, which will limit typical annual household bills to £2,500 for two years.

More than 20 different measures are expected to be announced in the mini-budget, including the controversial plan to abolish the cap on bankers’ bonuses and end “nanny state” measures such as the sugar tax.

Other possible measures include lifting the rate at which the base rate of income tax is paid from the current £12,571, or the highest rate from its current £50,271, as well as more generous tax allowances for married couples and the self-employed.

Mr Kwarteng’s allies are reluctant to end the bonus limit at twice a banker’s salary – despite the political ammunition he gives to the job – on the grounds that increased growth across the saving money is more of a priority than cracking down on individuals paying packages.

As one ally told this newspaper, “If we make the pie bigger, then everyone’s piece of the pie will be bigger.

Prime Minister Liz Truss is said to want a 'momentum for growth' in time for the next general election

Prime Minister Liz Truss is said to want a ‘momentum for growth’ in time for the next general election

Ms Truss made it clear during the Tory leadership campaign that she wanted to use the opportunities of Brexit to boost the city’s revenue.

Despite the government’s multibillion-pound folly, Mr Kwarteng’s allies are confident the Treasury will be able to meet current fiscal rules, which require debt to fall as a proportion of national income in 2024-25.

Their hopes appear to be pinned on pessimistic projections for future energy prices proving overstated and the UK economy proving more resilient than expected – helped by the ripple effects of the upcoming coronation of King Charles III.

Or Mr Kwarteng could simply ‘move the goalposts’ in the November budget later this year by extending the debt target until the next Parliament.

The mini-budget comes amid the latest figures which showed gross domestic product virtually stagnant in July, while inflation is in double digits. Mr Kwarteng will provide more details on the energy cap, which will save a typical home around £1,000 from October 1, when the current consumer price cap was set to rise significantly.

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