Chancellor Jeremy Hunt is floating more tax cuts in the upcoming Spring Budget ahead of this year’s General Election.
Mr Hunt has said the Government’s “plan is working” when it comes to the economy which “means cutting taxes”.
Commenting over the weekend, the Chancellor compared himself to Nigel Lawson who cut personal taxes under former Prime Minister Margaret Thatcher’s Government.
Writing for the Mail on Sunday, he said: “Just as Nigel Lawson positioned the City of London for the finance boom in the 1980s, this period of Conservative Government has seen the UK positioned for the massive technological boom we’re set to see in the coming years.”
The Chancellor has pledged to cut taxes even further
The rate of National Insurance was slashed from 12 to 10 per cent from January 6 with a worker on a £35,000 salary estimated to be £450 better-off, according to the Treasury.
However, analysts have questioned the impact of this supposed tax cut due to other tax announcements from the Government.
During his Autumn Statement, Jeremy Hunt also outlined plans to freeze tax allowances at their current level until 2028.
Experts have cited the impact of fiscal drag when taxpayers are dragged into higher tax brackets due to frozen thresholds while incomes rise at the same time.
According to The Financial Times, Mr Hunt may have £10billion in headroom for tax cuts against his fiscal targets.
The Government is hoping to introduce cuts to taxation before a General Election to reverse its current polling woes.
Prime Minister Rishi Sunak has promised the Conservatives “will always prioritise tax cuts” as the party prepares to go head-to-head with Keir Starmer’s Labour.
Mr Hunt has described himself as “brimming in confidence” about the state of the UK economy despite a shock drop in retail sales in December 2023.
Rishi Sunak has also suggested further tax cuts are on their way
He said: “Global challenges have made life tough for people in Britain but the economy is now turning a corner and we are now starting to see the fruits of our plan.
“Because of our careful management of the economy, we can start cutting taxes again in a way (that) is both affordable and boosts our growth.”
“The most dynamic economies tend to be places with lower taxes.
“The lesson is clear: supporting businesses with competitive taxes – not more government spending – is the way to growth.”