June 13, 2024

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Jeremy Hunt lines up personal tax cuts for the Budget

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Chancellor Jeremy Hunt will use the Budget on Wednesday to cut personal taxes, as he scrapes together the money needed to fund a package intended to lift Conservative MPs’ spirits ahead of the general election.

Hunt on Sunday promised to embark on the “long path” to lower taxation, but his room for manoeuvre has been limited by deteriorating economic forecasts, which he confirmed had “moved against us”.

The chancellor has been talking down expectations of big tax cuts, but Tory MPs still hope that he will match the 2p cut in national insurance rates he announced in his Autumn Statement last November, which will cost £10bn a year.

Hunt’s aides confirmed the chancellor would “love to” cut national insurance or income tax by 2p or more, but only if it was affordable.

They said his Budget on March 6 is “Part II” of a tax-cutting process that started in November.

“We’ve always said we would only cut taxes in a way that’s responsible and prudent,” Hunt told the BBC’s Sunday with Laura Kuenssberg programme. Overall tax levels are still rising, due largely to an ongoing freeze in tax thresholds.

Each 1p cut in employee national insurance rates costs £5bn a year, while a 1p reduction in the 20p basic income tax rate costs £7bn. A national insurance cut is seen as a more pro-economic growth measure as it would only benefit workers.

The chancellor has been looking at an “emergency package” of revenue raisers to pay for personal tax cuts, including stealing Labour’s plan to scale back the “non-dom” tax regime, securing between £2bn and £3bn a year.

Also on Hunt’s list of potential revenue raisers are an increase in air passenger duty for business travel, an extension of the windfall levy on oil and gas producers, a tax on vapes and abolishing the furnished holiday let regime, according to those close to the…

2024-03-03 14:56:49

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