Chancellor Kwasi Kwarteng has reversed plans to scrap the 45p rate of income tax ahead of his Conservative party conference speech later today.

The Chancellor released a statement on Twitter ahead of his appearance on BBC Breakfast on Monday morning.

Mr Kwarteng confirmed that the tax cut for people earning more than £150,000 would be scrapped just 10 days after it was announced in the mini-budget.

The U-turn comes after several Tory MPs voiced their opposition to the plan as the Tory party conference continues.

Former cabinet ministers Michael Gove and Grant Shapps criticised the income tax cut for people earning more than £150,000 at a time as millions of people struggle with the rising cost of living.

In his statement on Twitter, Mr Kwarteng said:"From supporting British business to lowering the tax burden for the lowest paid, our Growth Plan sets out a new approach to build a more prosperous economy.

"However, it is clear that the abolition of the 45p tax rate has become a distraction from our overriding mission to tackle challenges facing our country.

"As a result, I am announcing that I am not proceeding with the abolition of the 45p tax rate.

"We get it, and we have listened.

"This will allow us to focus on delivering the major parts of our growth package."

The Chancellor continued in his statement:"First, our Energy Price Guarantee, which will support households and businesses with their energy bills.

"Second, cutting taxes to put money back in the pockets of 30 million hard-working people and grow our economy.

"Third, driving supply side reforms – including accelerating major infrastructure projects – to get Britain moving.”

 

Bournemouth Echo: PAPA (Image: PA)

Prime Minister Liz Truss has also been criticised for singling Mr Kwarteng out as responsible for the tax cut.

Speaking to the BBC's Laura Kuenssberg, Ms Truss said on Sunday that: “it was a decision the Chancellor made” rather than one debated by the entire Cabinet.

READ MORE: Liz Truss ‘throws Kwasi Kwarteng under a bus’ over controversial tax cut

READ MORE: Cost of living: What kitchen appliances use the most electricity?

What is the tax cut?

The new tax cut would see the 45% tax rate on incomes over £150,000 abolished.

This has seen a negative reaction since its announcement as the country faces a cost of living crisis.

Some Conservative MPs, including high-profile former ministers, have also voiced anger over the cut.

The tax cut was announced as part of the Chancellor's mini-budget and was due to come into effect in April 2023.

When is the Chancellor Kwasi Kwarteng's speech at the Tory Conference?

Following Monday morning's statement, Chancellor Kwasi Kwarteng will speak at the Conservative Party Conference in Birmingham today.

The speech will be keenly watched across the country following the U-turn announced earlier in the day.

He is expected to make the address around 4 pm just shortly before the markets close.

Mr Kwarteng was expected to say that the Conservative Party needed to “stay the course” and back his plan for tax cuts in the face of a mounting Tory revolt.

However, The Sun newspaper had reported earlier that Prime Minister Liz Truss was preparing to ditch the plans after talks with Mr Kwarteng following the backlash.

The Chancellor is likely to elaborate on the Government's growth plan and the Energy Price Guarantee, further tax cuts as well as supply side reforms.