Sunday, 23 Jun 2024

Sunak to help keep money in pockets with 2p pre-election tax cut

Rishi Sunak is considering slashing taxes by up to 2p before next year’s general election to help ease the burden on hard-pressed families.

The Prime Minister is looking at cutting National Insurance or income tax to help keep more money in ­people’s pockets.

Officials believe that a slower-than-expected fall in Britain’s high inflation rate would not prevent a reduction in duty from April.

Mr Sunak previously said he wants to slash taxes, but only once public finances have been fixed – and pledging to halve inflation this year.

Senior figures believe that the economy is likely to recover sufficiently for Chancellor Jeremy Hunt to introduce the cuts next spring. Such a move would come just before an expected summer or autumn general election.

A senior Government source said Mr Sunak wants to cut income tax or National Insurance when inflation has receded, on the basis that both would “incentivise work”.

Another source said: “No one should be in any doubt that we will go into the election having cut taxes and promising to do more. Cutting tax on working people is something he strongly believes in.”

After the reductions next April, Mr Sunak hopes to go into the election with a revived version of his leadership pledge to ease income duty by 1p in each year of the next Parliament.

Tory MP John Redwood, however, said the Government shouldn’t wait. He added: “Stop the tax attack on the self employed. Up the VAT threshold. Cut rates of business tax to boost investment and revenues. Go for growth. Do it now.”

Mr Sunak and Mr Hunt fear that cutting personal levies with inflation at its current level of 8.7 per cent would force interest rates higher. The Treasury declined to comment.

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