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December 4 2021 | thetimes.co.uk | No 73646 2GWinter
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Jemma Forte
December 4 2021 | thetimeorte
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Rishi Sunak is preparing to cut income
tax by 2p in the pound or to slash VAT
rates before the next election, The Times
has learnt.
The chancellor has told officials to
draw up detailed plans to reduce the tax
burden, with a third option to cut inher-
itance tax also under consideration.
Sunak’s preference is said to be an in-
come tax cut over the next three years as
part of a “retail” offer before 2024, when
the next general election is expected.
The Conservatives are also considering
scrapping the 45p higher rate of income
tax in their election manifesto. The VAT
cut would be to the headline rate of
20 per cent, along with more targeted
reductions to the regime. Under one
plan being considered, households using
green energy could pay lower rates.
The Treasury is working on plans to
increase the threshold for inheritance
tax, which is £325,000 unless it involves
property left to children, when it is
higher. The figure has been frozen since
2009, with 22,800 estates paying 40 per
cent on anything above that.
Sunak is determined to shed his
reputation as a “high-tax, high-spend”
chancellor after the pandemic. Boris
Johnson has also made clear he wants to
be a tax-cutting prime minister.
The tax burden is forecast to rise to the
highest level since the Labour govern-ment in the early 1950s after increases in
corporation tax and national insurance.
The chancellor set aside £14.7 billion to
fund tax cuts if the pandemic is brought
under control. It is far more than the re-
serves gathered by his predecessors.
Sunak told Treasury officials to re-
view the tax burden after stating in his
budget that it was his “mission” to cut
taxes. Ten options were drawn up and
more detailed work is being carried out
on three of them — income tax, VAT
and inheritance tax.
The chancellor has made clear to
colleagues that there will have to be
strict limits on public spending if cuts are
to go ahead. This week he told the
cabinet the NHS must show “tangible”Steven Swinford Political Editor
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signs of improvement after record levels
of funding. A Treasury source said: “The
best way to help people is to let them
keep more of their hard-earned money
and ensure that work pays. But things
are tight and in order to deliver on our
promise to cut taxes, we need to be
disciplined on spending.”
The source said that the plans could
be disrupted by a combination of coro-
navirus and other “economic head-
winds”, including inflation. However,
both Sunak and Johnson want to push
ahead with the tax cuts if possible.
The Times understands that income
tax cuts are a clear favourite. A 1p cut in
the basic rate of tax would cost about
Continued on page 2, col 3Recipe for success Giles Coren with Nestor Masudi, who fled the Democratic Republic of the Congo for Glasgow, where the Scottish Refugee Council supported him as he
trained as a chef. He now works at Bibendum in London, which has two Michelin stars. The refugee councils of Britain are one of The Times’s Christmas charities. Pages 20-
Sunak plan to slash taxes
6 Income tax could be cut by 2p 6 Tories also consider VAT reduction before general election
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