Stamp duty and national insurance cuts are reportedly being considered by Jeremy Hunt before the next general election.
The chancellor has previously hinted there could be another “fiscal event” before voters go to the polls in an attempt to boost the Conservatives’ tax-cutting credentials.
The Times reported that the Treasury was considering plans to increase the threshold at which people buying a house would need to pay stamp duty, from £250,000 to £300,000, in the pre-election autumn statement, meaning nearly half of new homebuyers would not pay the tax. It is believed the move would cost about £3bn a year by the end of the decade.
Stamp duty cuts were considered for the spring budget but axed in favour of a 2p cut to national insurance, the Times reported. Another pre-election “fiscal event” that is reportedly being considered is a further 2p cut to national insurance.
A government official with direct knowledge of the plans told the Financial Times: “The Treasury is working towards a September fiscal event and will try to cut national insurance by another 2p. That’s the plan.”
This week, Hunt also told the FT that he would like to cut taxes in an autumn fiscal event “if we can”, despite warnings from the International Monetary Fund that voter giveaways such as tax cuts will make cutting the UK’s national debt more difficult.
If a further 2p cut to national insurance goes ahead, the main NI contribution rate will have been halved from 12% to 6% since November 2023. Another 2p cut is thought to cost about £9bn.
Last month, Rishi Sunak pledged to cut national insurance entirely, a move that could leave a £40bn hole in public finances and hit already crumbling public services. The director of the Institute for Fiscal Studies, Paul Johnson, described the pledge as “not worth the paper it’s written on unless accompanied by some sense of how it will be afforded”.
The last two national insurance cuts, which added about £900 a year to the pockets of someone on the average wage, did little to boost the Conservatives’ standing in the polls, with Ipsos finding a record low of just 19% of voters backing the Tories in a recent survey.
The cuts come as experts sound the alarm about the dire state of UK public services. Eight councils in England have declared bankruptcy since 2018, including four – Woking, Nottingham, Birmingham and Thurrock – in the past 18 months. Nearly one in 10 councils are expected to declare bankruptcy this year, a poll by the Local Government Information Unit found.
Next month, Hunt’s pre-election tax cut plans will be put under the microscope when the IMF conducts its in-depth look at the UK economy. IMF officials said the team sent to London to conduct its annual health check would be looking closely at whether tax increases or spending cuts would be needed after the general election.
A date for the next general election has not yet been set.
A Treasury spokesperson said: “Any fiscal events would be announced in the usual way.”