Pressure is mounting on UK Health Secretary Jeremy Hunt to introduce tax cuts ahead of the upcoming General Election. The call for tax cuts comes as the country’s public sector borrowing falls short of expectations. In July, net public sector borrowing stood at £4.3 billion, which is lower than the projected median forecast of £5 billion.
Experts suggest that the government may consider tax cuts for political reasons rather than solely based on economic conditions. Rishi Sunak, the former Chancellor of the Exchequer, had previously proposed a 1p cut in income tax for 2024. However, this plan was abandoned by Jeremy Hunt last year. Now, there are talks of reinstating the planned 1p cut, which could send a strong political message.
Boris Johnson, the Prime Minister, has expressed his intentions to reduce the basic rate of income tax by 2p or to decrease National Insurance by a similar amount. On the other hand, Jeremy Hunt remains cautious and emphasizes the importance of maintaining a responsible approach to public finances, even as inflation slows down. He believes that sticking to their plan will lead to a decrease in inflation, economic growth, and reduced debt.
The news of a possible tax cut is likely to be well-received by many Britons, especially after the implementation of tax increases earlier this year. For instance, the capital gains tax exemption allowance has been reduced from £12,300 to £6,000 and is set to decrease further to £3,000 by April 2024. Meanwhile, rising earnings and the increasing cost of living continue to put a strain on household budgets.
To determine their income tax rate, individuals can refer to the tax code on their payslip. However, with ongoing developments in the tax landscape, it is essential to stay updated and informed.
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