Johnson at No 10, Javid at No 11: what it will mean for your taxes

Higher earners, property owners and investors could be due for a boost from Britain’s new Prime Minister and Chancellor. Proposals to cut income tax and stamp duty featured in the leadership campaign that has put Boris Johnson into the top spot and Sajid Javid at the Treasury.

Under Mr Johnson’s proposals the 40pc tax threshold would be raised to £80,000 from its current level of £50,000. Someone on a salary of £80,000 would see their tax bill fall by £6,000 to £13,500 a year. Over the past decade, the point at which someone pays 40pc income tax has increased by just £6,000.

He also suggested changes to National Insurance that would reduce the tax saving but leave pensioners and those who live on investment income better off.

Mr Johnson proposed making changes to National Insurance thresholds. Combined with his income tax plans, this change could mean that wealthier households’ disposable incomes rise by £1,790, not £6,000, according to the New Economics Foundation, a think tank.

Those who do not pay National Insurance, such as those who live on a pension or rely on income from their investments, would keep the full benefit of the income tax cut. The

poorest families would see no benefit.

Mr Javid may propose an alternative tax plan from his position as Chancellor. During the leadership campaign he said he would scrap the highest tax rate of 45pc, which applies to earnings of more than £150,000. The income tax savings from this change would be unlimited for the highest earners. According to the most recent data available, the 1pc of taxpayers on the highest incomes earned £166,000 or more. Under Mr Javid’s plans they would pay tax at only 40pc beyond the basicrate band.

He added that he would also seek to lower the tax burden on basic-rate taxpayers. Mr Javid did not state a specific figure but reducing the 20pc rate to 15pc would mean a tax cut of £825 for someone on a salary of £30,000, rising to a saving of £1,875 a year for a worker who earned between £50,000 and £80,000. Would-be homeowners could also receive a tax break. Mr Johnson has proposed raising the threshold for paying stamp duty from £125,000 to £500,000 (firsttime buyers are already exempt on properties that cost less than £300,000), at the same time as lowering the top rate from 12pc to 7pc. Currently buyers pay 5pc on properties priced from £250,001 to £925,000, 10pc between this and £1.5m and 12pc thereafter. According to analysis by Savills, an estate agent, Mr Johnson’s plans would free an additional 300,000 property buyers from stamp duty, based on 2018-19 figures. This means a total of 651,500 transactions last year would not have incurred stamp duty – or 71pc of residential sales in England and Northern Ireland. Onward, a think tank, has suggested that another option for Mr Johnson would be to halve stamp duty for all homes worth more than £500,000. The number of property buyers who could be freed from stamp duty under Mr Johnson’s plans

Boris Johnson and Sajid Javid pledged to ease tax burdens

Philip Hammond, former chancellor