Sunak mulls 2 pence tax cut before UK election

UK Prime Minister Rishi Sunak wants to cut National Insurance or income tax by as much as two pence (three Singapore cents) before next year’s general election to try and encourage people back to work, the Telegraph reported.

Sunak and government officials have been assessing the impact and potential duration of the current high levels of inflation, and believe the economy should recover sufficiently for Chancellor of the Exchequer Jeremy Hunt to announce a tax cut in April, the Telegraph said late on Saturday (Jun 3), citing anonymous sources.

Sunak made a leadership pledge last year to slash taxes by 20 per cent by the end of the decade, as he attempted to rival tax cuts promised by former prime minister Liz Truss. He said at the time he would cut income tax by 1 per cent from 2024, but emphasised the need to get inflation and borrowing under control.

Sunak’s focus in the leadership race was on income tax rather than National Insurance. The current basic rate of income tax in the UK is 20 pence per pound.

Sunak is also looking at the possibility of raising the thresholds at which workers start paying income tax and National Insurance, but there is concern that those measures could be very expensive, the Telegraph said, without saying where it got the information. BLOOMBERG