UK to reverse cut to higher rate income tax - BBC

BY Reuters | ECONOMIC | 10/03/22 01:52 AM EDT

LONDON (Reuters) - The British government is expected to reverse the proposed scrapping of the highest rate of income tax that has sparked a backlash in the governing Conservative Party, the BBC reported on Monday.

Finance minister Kwasi Kwarteng sent shockwaves through financial markets when he published a mini-budget on Sept. 23, cutting taxes including the 45p highest rate of income tax, in a "growth plan" to be funded by vast government borrowing.

The government had stuck to the policy, even as the value of the pound and government bonds fell, but several senior lawmakers have stepped up their opposition to it at the party's annual conference which began on Sunday.

On Sunday, former minister, Michael Gove, long at the heart of government, hinted he might vote against cutting taxes for the wealthy.

Kwarteng had planned to tell the conference on Monday that the government "must stay the course" and he was confident the plan was the right one, according to advance excerpts released by his team.

The BBC said the government was expected to make an announcement in the next hour. No one at the Treasury was immediately available to comment.

Kwarteng has said he will set out his funding plans on Nov. 23 in a full fiscal statement.

(Reporting by Kate Holton; editing by Guy Faulconbridge and Kylie MacLellan)

In general the bond market is volatile, and fixed income securities carry interest rate risk. (As interest rates rise, bond prices usually fall, and vice versa. This effect is usually more pronounced for longer-term securities.) Fixed income securities also carry inflation risk and credit and default risks for both issuers and counterparties. Unlike individual bonds, most bond funds do not have a maturity date, so avoiding losses caused by price volatility by holding them until maturity is not possible.

Lower-quality debt securities generally offer higher yields, but also involve greater risk of default or price changes due to potential changes in the credit quality of the issuer. Any fixed income security sold or redeemed prior to maturity may be subject to loss.

Before investing, consider the funds' investment objectives, risks, charges, and expenses. Contact Fidelity for a prospectus or, if available, a summary prospectus containing this information. Read it carefully.