Teachers and nurses face tax increase after mini-budget hands cut to bankers

Abstract

While the tax-cutting package brought forward a promised reduction in the basic rate of income tax from 20% to 19%, that cut will be more than offset by a decision to freeze the point at which people start paying tax. A teacher on a starting salary of £25,700 will see their income tax rise by £121 in 2023-24 once the threshold freeze is taken into account, according to research by the Liberal Democrats. A top banker earning £2.5m will enjoy a tax cut of more than £117,000. The Lib Dems pointed out that the government's tax giveaway to one top-earning banker would be enough to cancel the tax increase for more than 1,000 nurses. Tax changes"It is staggeringly unfair that this Conservative government is hiking taxes on our nurses and teachers, while giving big businesses and banks a massive tax giveaway," said Ed Davey, the Lib Dem leader. "Cutting taxes for the most wealthy while hammering ordinary families with years of stealth taxes shows just how out of touch this government has become."Paul Johnson, director of the Institute for Fiscal Studies, said: "Certainly, in the medium term, the four-year freeze in the personal allowance and other tax thresholds is really quite a big tax rise. And that does mean that, by the end of the period, anyone who's not earning more than £150,000 will be somewhat worse off."However, government aides say that the vast majority of workers will benefit from the cut to the basic rate of tax, as well as the cap to energy prices set to save households about £1,000 this winter. The tax cuts have put further pressure on the Bank of England to increase interest rates in order to keep inflation under control.