Basic rate income tax cut announced then cancelled

Kwasi Kwarteng, then chancellor, announced in September 2022 that the basic rate of income tax would decrease from 20% to 19%. When Rishi Sunak became Prime Minister the following month, the planned cut was cancelled before it was due to be introduced, so the rate stayed the same rather than being cut and then raised again¹.

The announcement and its reversal feature in a fact check by Full Fact, published on 24 January 2024, examining a claim that there had been 25 tax rises since the 2019 general election¹. Full Fact said it had contacted the Labour party press office several times for the evidence behind the figure without response, and that what appears to be the list was shared by Lord Livermore, a shadow exchequer secretary to the Treasury¹.

That list includes an entry described as the "increase in income tax rate in October 2022 mini-Budget U-turn"¹. Full Fact notes the list appears to include a change to income tax that ultimately was not implemented¹. The same list counts a number of freezes to tax thresholds as rises in tax, which Full Fact describes as appearing uncontroversial¹.

The Institute for Fiscal Studies told Full Fact that counting tax rises is not very meaningful because it does not distinguish between large and small measures. Stuart Adam, a senior economist at the IFS, said: "It's pretty arbitrary how you count them, and it's pretty meaningless anyway if you're just counting each tax rise regardless whether it's a £5 million tax rise or a £50 billion tax rise"¹. The IFS has said the current parliament is "the biggest tax-raising parliament in modern times"¹.

Why it matters for households

The basic rate of income tax remained at 20% throughout, so households did not see the 19% rate that had been announced in September 2022¹. The episode matters mainly for how tax changes are counted and described: a measure that was announced but never introduced can still appear in lists of tax rises, as it does in the list Full Fact examined¹. The rate itself, and the bands and thresholds that determine a bill, are set out in our guide to income tax.

What happens next

No further steps are reported. Full Fact said the Labour party press office had not responded to its questions about how the list was compiled, and that it had not seen the list of 25 tax rises published anywhere¹.