Richest fifth of households the big winners in mini-budget

In contrast, only 12% of the gains will go to the poorest, who will be just £230 better off.

Meanwhile, the IFS said that while Mr Kwarteng's changes undid many of the tax rises introduced by Boris Johnson and Rishi Sunak, the vast majority of taxpayers would still be paying more than they were in 2019.

They said only those with incomes over at least £155,000 will be net beneficiaries.

Reversing the hike in national insurance and scrapping planned rises in corporation tax had been expected.  So too was the Chancellor's decision to bring forward by a year the 1p cut in the basic rate of income tax.

However, abolishing the top 45% rate of income tax in England caught MPs by surprise.

It means that anyone earning over £150,000 will now pay the same rate as someone earning £50,000.

According to an analysis by the Chartered Institute of Taxation, after the changes, someone in England earning £30,000 a year will be £174 better off, while an employee earning £250,000 will be up £5,377, and anyone paid £1m will save £43,000.

Mr Kwarteng told MPs that he was determined to drive up growth. He said the UK could reach a trend rate of 2.5% through lowering taxes and cutting regulations to break down the “barriers for enterprise.” 

“That is how we will deliver higher wages and greater opportunities and, crucially, fund public services, now and into the future,” he said. “That is how we will compete successfully with dynamic economies around the world and that is how we will turn this vicious cycle of stagnation into a virtuous cycle of growth.”

The Chancellor said high taxes had reduced “incentives to work, deter investment and hinder enterprise.” 

The top 45p income tax rate on earnings of more than £150,000 a year will be scrapped from April, leaving the highest rate at 40p, benefiting around 660,000 of the highest earners.

A Treasury spokesperson said the chancellor “disagreed” that it was a budget for the rich but rather “growing the economy benefits everyone”.

The Resolution Foundation said the cuts would boost growth in the short-term but ultimately lead to an increase in interest rates.

They said this and the borrowing to fund the government's energy price schemes for businesses and householders would lead to an additional £411bn of borrowing over the next five years.

The think tank warned that Mr Kwarteng’s ambition to bring debt down without tax rises could require spending cuts of £35 billion in 2026-27.

Torsten Bell, Chief Executive at the foundation, compared Mr Kwarteng to Ted Heath's Chancellor Tony Barber, who attempted to boost growth with huge tax cuts. That ended in failure. 

He said: “This may not have been a Budget, but the Chancellor has certainly blown the budget with the biggest package of tax cuts announced since the ill-fated Barber Budget of 1972. 

“His decision to combine the largely unavoidable higher deficit caused by rising energy prices and interest rates with permanent tax cuts will drive up borrowing by over £400 billion in the coming years.

"No Chancellor has ever chosen to permanently increase borrowing by so much.

“Without significant cuts to public spending, debt will be on course to rise in each and every year. This is not what sustainable public finances look like. Every scrap of Treasury orthodoxy has been torn up.”

In their analysis, the Institute for Fiscal Studies said Mr Kwarteng was "betting the house” on his new strategy. 

The said in 2025-26, the combined impact of all reforms to income tax and NICs introduced over the course of the current parliament would still "leave the vast majority of income tax payers paying more tax."

They said the biggest losers in cash terms will be those earning between £63,000 and £125,000 who will be paying £1,570 more in direct tax in 2025-26 than if no changes had been made. 

Only those with incomes over at least £155,000 will be net beneficiaries as they gain from the abolition of the additional rate, and are unaffected by freezing the personal allowance "because their incomes are too high to be eligible for one anyway."

Paul Johnson, the think tank's director, said the Chancellor had announced the biggest package of tax cuts in 50 years "without even a semblance of an effort to make the public finance numbers add up".

He added: "Instead, the plan seems to be to borrow large sums at increasingly expensive rates, put government debt on an unsustainable rising path, and hope that we get better growth.

"This marks such a dramatic change in the direction of economic policy-making that some of the longer-serving cabinet ministers might be worried about getting whiplash."

He also suggested the Bank of England would likely raise rates in response to the package.

"Early signs are that the markets – who will have to lend the money required to plug the gap in the government’s fiscal plans – aren’t impressed. This is worrying. Government borrowing is set on an upward path.

"It will reach its third-highest peak since the war, and remain at well over £100 billion, even once the energy support package is withdrawn.

"And we heard nothing on public spending.

"It seems almost inconceivable that plans made last year, when inflation was expected to peak around 3%, will not need topping up at some point, unless the government is willing to allow a further deterioration in the range and quality of public services.

"Presumably this government would borrow for that also. 

"Mr Kwarteng is not just gambling on a new strategy, he is betting the house.”