Tory manifesto: Boris Johnson ditches planned income tax cuts for high earners

National insurance cut next year confirmed, but no timetable for further reductions promised by prime minister

Andrew Woodcock
Political Editor
Sunday 24 November 2019 16:47
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Boris Johnson’s promise of income tax cuts worth £8 billion for Britain’s highest earners has been ditched, the Conservative manifesto confirmed.

The prime minister said he had decided to focus tax cuts instead on “people who need them most” by raising the threshold for National Insurance contributions (NICs) to £9,500 next year.

But there was no provision in costings provided by chancellor Sajid Javid for a further increase in the NIC threshold to £12,500, which the prime minister has set as his “ultimate ambition”

Mr Johnson made the pledge to raise the earnings level at which the 40p income tax rate kicks in from £50,000 to £80,000 during his successful campaign for the Tory leadership earlier this year.

But he confirmed today that the tax cut, which would have benefited the 10 per cent richest households in the UK by up to £6,000 a year, has been dropped.

The manifesto confirmed that the threshold below which no NICs are payable will rise fro £8,632 to £9,500 next year, worth around £100 a year to 31 million workers earning above that amount.

But it set out no timescale for a later increase to £12,500, which Mr Johnson said would be worth about £500 a year to taxpayers.

Mr Javid’s costings document put the price of the initial rise at £2.17 billion in 2020/21, but made no provision for later substantial rises in subsequent years, with the total cost increasing to just £2.5 billion by 2023/24.

Asked why he had dumped plans to give high-earners a tax break, Mr Johnson said: “I haven’t lost any of my tax-cutting zeal. I believe in cutting taxes where you can.

(AP

“That’s why we’re cutting taxes on National Insurance, which helps every taxpayer in the country. That’s why we’ve raised the personal allowance.

“We believe in cutting taxes, but I think that at this particular juncture – when people as a result of the economic disaster left by the last Labour government have been going through some quite tough times and when people want to see spending on the NHS now – I think it is right to focus our tax cuts on people who need them most.”

Nimesh Shah, a partner at accounting and tax advisory firm Blick Rothenberg, said: “ The Conservative Manifesto was fairly static on changes to tax, with the only noteworthy announcement being an £868 increase to the National Insurance primary threshold to £9,500. This will provide an annual £104 tax cut across the board for workers.

"Most significantly, the Conservative manifesto made no mention of Boris Johnson’s leadership pledge to increase the basic rate income tax band to £80,000. This measure would have given a tax cut of up to £6,000 but was estimated to cost the Treasury around £8 billion. The proposal appears to have been dropped completely, and it’s difficult to now see if this measure will be introduced."

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