Will the UK get tax cuts in Jeremy Hunt’s 2024 spring Budget?

Ahead of the Budget, chancellor Jeremy Hunt says he will cut taxes but only in a responsible and ‘prudent’ way

Matt Mathers
Wednesday 06 March 2024 09:23 GMT
Jeremy Hunt plays down expectations of tax cuts ahead of spring Budget

Jeremy Hunt will deliver what could be his final spring Budget when he sets out the government’s spending plans this week.

With the Conservative Party lagging in the polls, the chancellor has been under enormous pressure from backbenchers to cut taxes and win back voters ahead of the general election.

But what levies could Mr Hunt cut and how will he fund them when he appears at the dispatch box on Wednesday afternoon?

National Insurance

A 2p reduction in National Insurance contributions (NICs) looks to be the most likely personal tax-cutting measure to be announced by Mr Hunt, according to reports.

Mr Hunt told broadcasters on Sunday that he wanted to “show a path” to reducing the overall burden but warned that he would have to show that any tax cuts were affordable, “prudent” and “responsible”.

Forecasts show that a 2p cut to NICs - benefitting workers - will cost the public purse around £9bn and be funded through a combination of other tax rises and spending cuts.

Income tax

File photo: Jeremy Hunt and Rishi Sunak
File photo: Jeremy Hunt and Rishi Sunak (Simon Dawson / No 10 Downing Street)

Mr Hunt and Rishi Sunak, the prime minister, have made no secret of their desire to cut income tax - the measure preferred by Tory backbenchers.

But recent OBR forecasts have given the chancellor far less money to spend in the Budget at a time when growth in the UK economy, which is in a shallow recession, is weak.

And some analysts have argued that cutting income tax could stoke inflation, which remained frozen at 4 per cent in January.

The occupants of Nos 10 and 11 Downing Street were reportedly due to meet on Sunday evening to make a final decision on whether to cut NICs or income taxes.

Cutting 2p from income tax would cost around £14 billion - the Office for Budget Responsibility’s most recent forecast, published on Wednesday, said the Treasury had £12.5bn to spend.

Of that £12.5bn, the chancellor needs to set aside £6.5bn to meet his own fiscal rules, leaving him with £6.bn to spend.

How would any tax cuts be paid for?

The chancellor could raise revenue on air passenger duty in order to fund tax cuts in this week’s Budget.

It is unclear exactly how much money the move would raise but the figure is thought to be in the hundreds of millions.

Meanwhile, Labour is preparing for Mr Hunt to steal its flagship policy and scrap the non-dom tax loophole in the Budget.

The chancellor is considering an emergency move to poach one of Sir Keir Starmer’s key plans, which underpins Labour’s biggest spending commitments.

Labour analysis said scrapping the non-dom status would raise around £2bn.

He is also said to be considering a tax on vapes, an extension of the windfall tax on oil and gas producers.

A further measure being considered to fund tax cuts is abandoning perks for second homeowners who make money from holiday lets.

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