Rishi Sunak has begun to plan a series of Income Tax cuts before the next election, after he promised Tory MPs in October that he would be ease the tax burden by the end of this parliament.
The chancellor plotted out increases in Corporation Tax and National Income Contributions this year, that will increase the UK’s tax burden to its highest level since the 1950s, in the wake of record public spending during Covid-19.
Sunak, a self-avowed low-tax Thatcherite, said in his autumn Budget speech “by the end of this Parliament, I want taxes to be going down not up”.
The next General Election is due to happen no later than 2024.
The Times revealed that Sunak is now considering cutting Income Tax by 2p and scrapping the top 45p bracket altogether.
Other changes under consideration by the chancellor are a cut to VAT on green energy bills from the current 20 per cent level and a cut in inheritance tax.
The inheritance tax changes under consideration would see the threshold increased from its £325,000 level.
Paul Johnson, director at the highly influential Institute for Fiscal Studies (IFS) think tank, said these moves would be “indefensible” in light of the government’s recent across the board increase in National Insurance by 1.25 basis points to fund health and social care spending.
“To introduce the health and social care levy, which essentially only affects workers, then to cut income tax, which also benefits people who receive their income from rent, occupational pensions and other holdings, discriminates in favour of the wealthy,” he said.