Kwasi Kwarteng’s tax cuts will benefit richest amid dividend boom – report
Kwasi Kwarteng is pushing ahead with a multimillion pound tax cut for wealthy individuals despite growing concerns over the public finances, according to a report highlighting a boom for investor dividends since the Covid pandemic.
On a renewed day of turbulence in financial markets over the chancellor’s unfunded tax cutting plans, the Treasury confirmed it would reduce the rate of income tax on dividends.
The move was announced by Kwarteng during his mini-budget, alongside the Truss government’s plan to reverse the national insurance rise launched by Boris Johnson earlier this year, which is due to take effect from 6 November.
Both the rate of national insurance and dividend tax will be reduced by 1.25 percentage points by the move.
However, research by the thinktanks Common Wealth and the Institute for Public Policy Research (IPPR) showed investors had benefited from a boom in dividend payouts since the Covid pandemic at a time of meagre growth in workers’ pay.
The report found the tax cut would cost £600m a year and would largely benefit Britain’s richest individuals. It comes as ministers consider slashing public spending in order to help meet a shortfall in the public finances of about £60bn after the mini-budget.
Kwarteng last week U-turned on a controversial plan to abolish the 45p income tax rate after a rebellion by backbench Conservative MPs, but is facing continuing pressure to find savings amid a meltdown in financial markets over his tax and spending plans.
Chris Hayes, a senior data analyst at Common Wealth, who wrote the report, said: “It is a shame that the chancellor’s U-turn does not extend to his tax cuts on dividends, which benefit the very wealthy and are already subject to very generous treatment.
“For two
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