A cut to income tax rates - How will this affect business owners and taxpayers?

The Chancellor advised in his statement that the rate reduction is aimed at workers, pensioners, and savers.  This is very much the case with the rate reduction applying to non-savings and savings only.  Dividend rates will remain at the newly increased levels of 8.75%, 33.75%, and 39.35% from April 2022, having no benefit to investors and business owners.    

Additionally, with the devolution of taxes for Scottish taxpayers, it is not known at this time whether the rate reduction will be implemented north of the border.  Instead, the Scottish Government will be given additional funding of around £350 million in 2024-25, for which they can use how they choose.   

A couple of quirks that will be interesting to see are how this rate reduction will apply in practice and, for gift aid and pension contributions.   

For gift aid, there appears to be a 3-year transition period for which basic rate tax relief will remain at 20%, but how this interacts for those higher earners outside Scotland claiming further relief remains to be seen - would this be at 21% or 20%?     

The reduction in basic rate income tax may deliver extra cash now, but for those saving into pensions, it will mean less money going to build those pension funds.  Whether the Government will compensate the reduced tax relief is something that will come to fruition.