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Government U-turn on plans to scrap 45p tax rate

Isobel Lawrance 4th Oct 2022 No Comments

Reading Time: 2 minutes

The government have made a U-turn on a plan laid out in the mini budget.

In the recent mini-budget, announced by Chancellor Kwasi Kwarteng, a plan was announced to scrap the 45p income tax rate. This is paid by those earning more than £150,000 per year. It was announced as part of the largest tax cutting announcement in decades. 

But now, the government have made a huge U-turn on these plans, marking a humiliating climbdown for the new Prime Minister. On Sunday, Liz Truss had said she was committed to the policy. But just hours later, the Chancellor announced the proposal had been abolished. 

Mr Kwarteng told the BBC the policy had become a “massive distraction on what was a strong package”. He continued, “We just talked to people, we listened to people, I get it”. 

The package also included support in paying for energy bills, cuts to the basic rate of income tax and scrapping plans to increase corporation tax. However, the Chancellor has said there is “more to come”, altho0ugh no further tax cuts will be announced prior to the next Budget in Spring 2023. 

government u-turn

The government are set to announce their fiscal plan on November 23rd. This will include forecasts for the mini-budget and more details about whether these tax cuts will mean spending cuts for public services going forward. 

What did people have to say?

The policy received huge backlash from both the general public and members of the conservative party itself. Many MPs came forward and voiced their concerns about the policy. It also saw remarkable opposition from the markets. 

Labour told the government to “reverse their whole economic, discredited trickle-down strategy”. Many people also suggested the initial policy was tone deaf during a cost-of-living crisis when millions of people across the UK are struggling to pay their bills. 

Sir Ed Davey of the Lib Dems even called for the chancellor to resign, suggesting he no longer has “any credibility”. He also stated the whole mini-budget needed a huge overhaul. 

The 45p income tax rate applies to income above £150,000. This is applicable in England, Wales and Northern Ireland. Abolishing this tax rate made up around £2bn of the £45bn worth of tax cuts announced within the mini-budget. 

You can read all of the new policies laid out by the Chancellor in this mini-budget here. 


What are your thoughts on the mini-budget? How do you feel about the government’s U-turn on abolishing the tax rate for higher earners? We want to hear your thoughts! Feel free to leave a comment below. 

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