The Chancellor, Kwasi Kwarteng has announced plans to scrap the proposed removal of the 45p tax rate from April 2023. The proposed removal of the 45p Rate was first announced as part of the Growth Plan measures on 23 September 2022. However, the change sparked a backlash that has sent shockwaves through the financial markets and even saw many members of the Conservative party actively campaigning against the move.
The Prime Minister and the Chancellor initially refused to backdown on the measure but eventually accepted that they were left with little choice but to U-turn on their proposal. The announcement of the U-turn was made earlier this week on the second day of the Conservative Party conference in Birmingham.
A Twitter statement from the Chancellor announcing the move said:
‘It is clear that the abolition of the 45p tax rate has become a distraction from our overriding mission to tackle the challenges facing our country. As a result, I’m announcing we are not proceeding with the abolition of the 45p tax rate. We get it, and we have listened. This will allow us to focus on delivering the major parts of our growth package.’
This means that the Additional Rate of Income Tax of 45% that applies to taxpayers with an annual income over £150,000 will remain in the 2023-24 tax year.