‘Disciplined on spending’ Rishi Sunak plans to slash income tax by 2p before next election

Brexit: Rishi Sunak on tax system that makes 'no sense'

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On top of the plans to cut tax, the Chancellor of the Exchequer, 41, is also reportedly considering a VAT reduction. According to The Times, Mr Sunak has told officials to draw up plans which aim to reduce the tax burden.

Although his preferred plan is to cut income tax over the next three years, Mr Sunak has reportedly asked that ten options be drawn up.

Three of the tax-cutting options – income tax, VAT and inheritance tax – are purportedly being drawn up in more detail

The plans come after the Chancellor previously promised that “actions speak louder than words” and urged the public to trust that he would deliver the tax cuts before the next election in 2024.

Both Mr Sunak and the Prime Minister are keen to cut back on tax, with the Chancellor previously stating in his budget that it was his “mission” to slash taxes and Mr Johnson making clear he wishes to be a tax-cutting premier.

A Treasury source told The Times that in order for the Government to deliver its tax cutting promises, it must be “disciplined on spending.”

They 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.”

However, the source added that the plans may be scuppered by a combination of the coronavirus and other “economic headwinds”.

Under the plans, VAT on green energy could be reduced and basic rate payers could be up to £750 better off each year.

The Tories are also reportedly considering scrapping the 45p higher rate of income tax from their 2019 election manifesto.

According to the report, the Treasury is also working on plans to increase the threshold for inheritance tax which has been frozen at £325,000 since 2009. 

One cabinet minister also told The Times that the Tories needed a “retail policy” on tax.

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They said: “There’s no point in waiting until 2024 — it will be too late.

“The cost of living crisis is starting to bite, inflation is looming.

“We need to do something sooner, to demonstrate our low-tax credentials.”

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