Whatever economists may be saying, and irrespective of how much the country is in debt (frightening figures), tax cuts are fast coming down the slipway. As certain as death... and taxes.
We will be told precisely what is on the slipway on March 6 when Jeremy Hunt, chancellor of the exchequer, presents the 2024 Budget – although I imagine most of the details will be leaked in advance.
Treasury officials are as leaky as Thames Water, where nearly a quarter of water supplies are lost through leaks (bet you didn’t know that).
In addition, there may well be another batch of cuts ahead of a general election as the government makes one final stab at persuading (bribing) the nation into giving the Tories another five years at the country’s helm.
I wouldn’t bet on this strategy working, although strange things do happen in politics. I remember 1992 when John Major defied the polls to win a fourth consecutive general election for the Conservatives, ending Neil Kinnock’s hope of ever becoming prime minister.
But Rishi Sunak, or whoever leads the Conservatives into the next election, has a truly Herculean task in overhauling Sir Keir Starmer. If they do, it will be as close as we will ever get to a modern-day miracle.
So, what tax-cutting tricks does Hunt have up his sleeve? A whole host I would say, given he has been responsible for raining down on the nation’s head a hailstorm of tax rises – either explicit or implicit through the freezing of a whole mishmash of allowances.
I would assume income tax cuts will be a priority. They seem to resonate most with the public.
If not income tax cuts, then maybe further reductions in national insurance rates (income tax in disguise) to add to the recent cut from 12 to 10 per cent for some 27mn workers, and smaller decreases for the self-employed.
I am also sure that a reduction in inheritance tax (even its abolition) will be a priority. Most Conservatives are vehemently opposed to the tax on a point of principle – it is a form of double taxation – and while the Treasury’s take from this tax continues to rise (£5.7bn in the last nine months of last year), the revenue lost from its abolition will not break its proverbial bank.
I know that most advisers believe IHT reform should not be a government priority because it’s a tax that most estates don’t get caught in – and lots of people can mitigate through careful financial planning.
My take on this (and I know I will get castigated for saying it) is that advisers calling for the ending of IHT is akin to turkeys voting for Christmas. In effect, they would be doing themselves out of a job.
Alongside any tax cuts, the government must unfreeze income tax thresholds. It is simply unacceptable that many pensioners, heavily dependent upon the state pension and a scratch of a private pension, are now being drawn into tax because of the freezing of the personal allowance at £12,570 – an amount it has been at since the tax year ending April 5 2021.
