Chancellor hints at further tax cuts ahead of Budget
- On January 24, 2024
- By GrowthInvest Marketing
Chancellor Jeremy Hunt has indicated further tax cuts could be on the cards, at the World Economic Forum in Davos last week (January 18).
Speaking to a group of journalists in Davos – including the Financial Times – Hunt described lower tax economies like North America and Asian as “more dynamic and more competitive” saying this was the direction he wanted to move in.
Hunt announced in the Autumn Statement he would be cutting NI taxes by two pence which came into effect January 6.
While this was aimed at putting more money in Brits’ pockets, for some the cut in NI was offset by frozen income tax thresholds which pull many into higher tax brackets.
Tom Selby, director of public policy at AJ Bell, said that income and inheritance tax could be what Hunt is considering cutting in the upcoming Spring Budget.
However, which one will be cut and to what extent will depend on the fiscal ‘headroom’ Hunt will have, according to Selby.
He said: “If the goal is to put more money in people’s pockets ahead of the general election, unfreezing income tax allowances would be the simplest way to do it.
“Alternatively, the chancellor could opt for a headline grabbing reduction in income tax rates, although this would create unwelcome complexity, as we have seen with reforms to the income tax system in Scotland, and would also be hugely costly for the Treasury.”
Cutting IHT or even abolishing it – which many expected to happen in the Autumn Statement but did not – would be a “popular pre-election giveaway” said Selby as the tax is widely disliked.
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