Rishi Sunak is preparing to cut income tax by 2p in the pound or to slash VAT rates before the next election.
The chancellor has told officials to draw up detailed plans to reduce the tax burden, with a third option to cut inheritance tax also under consideration, as understood by The Times.
This would mean the 45p higher rate of income tax could be scrapped and basic rate payers would be up to £750 better off each year.
Sunak’s preference is said to be an income tax cut over the next three years as part of a “retail” offer before the next general election, expected in 2024.
The VAT cut would be to the headline rate of 20 per cent, along with more targeted reductions to the regime, and aligns with Sunak’s vision to be a a “high-tax, high-spend” chancellor.
Under one plan being considered, households using green energy could pay lower rates.