Liz Truss is set to cut even more taxes as she doubles down on her economic vision for the UK. Chancellor Kwasi Kwarteng announced on Friday a sweeping reduction in taxes, for the biggest axe by a budget since 1972.
Treasury officials are said to be drawing up a list of “pinch points” that discourage Britons from earning more, as part of a review of the tax system.
The new tax cuts are said to include further reductions in income tax and discounts for savers and child benefit claimants and are likely to be announced as part of a full budget in April 2023.
Up to 1.6million savers could benefit from a review of the lifetime and annual allowances on pension pots, which currently can encourage employees to take early retirement to avoid the “tax trap”.
Workers who earn more than £100,000 are also said to possibly be given a full income tax personal allowance, under plans that amount to a tax break worth up to £5,000 a year to the highest earners.
Ministers are considering abolishing a charge for those who earn more than £50,000 and claim child benefit, over concerns it discourages households from earning more.
According to the Telegraph, red tape will also be slashed for small businesses with only larger firms required to conform to regulations.
However, further tax cuts could add to pressure on the pound after the £220billion policy blitz announced on Friday sent the pound crashing below $1.11 for the first time since 1985.
Mr Kwarteng announced the 45 percent additional rate income tax band for those earning more than £150,000 will be scrapped entirely.
In his mini-budget, he added the 40 percent higher rate, charged on incomes above £50,271, will remain, and a cut in the basic rate of income tax from 20 percent to 19 percent will be brought forward to April 2023.
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Northern Tory MPs, including those in red wall seats, are planning to meet early this week to discuss their response to Kwasi Kwarteng’s “mini budget”.
One Tory MP told the Observer: “Abandoning a voter coalition that won us a majority of 80 in pursuit of trying to win all seven libertarian voters in the country is certainly a bold move.”
Another senior Tory said: “I told Liz before that in areas like this it would be difficult to sell a free market, free enterprise approach when they have had a protective blanket thrown round them during the pandemic and since, with energy bills.”
Lord O’Neill, a former Tory Treasury minister, said he feared the package was “blue wall focused” and told the outlet: “Other than the investment zones, there is little in this for the north.
“It is completely blue wall focused. Have they just decided they’re going to abandon the red wall? I’m sensitive to this because of my background, but many people I know on a personal basis are talking about bankers’ bonuses.
“It’s almost like they deliberately made a song and dance out of trying to do more for higher earners. It’s very surprising.”
Sir Keir Starmer, Labour leader, announced a plan to turn the UK into an independent green “superpower” before 2030 through a massive expansion of wind and solar energy as a counter to Ms Truss’ tax cuts.
The Labour leader said he will double the amount of onshore wind, triple solar and more than quadruple offshore wind power, “re-industrialising” the country to create a zero carbon, self-sufficient electricity system, by the end of the 2020’s.
Sir Keir said while the Conservatives were indulging in “casino economics” and “gambling the mortgages and finances of every family in the country”, Labour was looking to create a secure future for everyone, both economically and in the face of climate change.