Hunt promises taxes will go down in the longer term


Chancellor Jeremy Hunt has insisted on his commitment to lower taxes over the longer term.

In his fall statement last week (November 17), Hunt announced a freeze on income tax thresholds until the 2027/28 tax year.

It also reduced the threshold for the top rate of income tax (45%) from £150,000 to £125,140.

He said it ‘simply wasn’t possible to raise £25billion by taxing only the wealthiest’.

At a Treasury Select Committee hearing today (November 23), Hunt told MPs he did not think that, against the backdrop of a £25billion tax hike, people would welcome long-term promises of tax cuts.

But, in the longer term, his plan is to cut taxes. He said that includes business taxes.

“We weren’t going in that direction in this budget,” he said.

“But I absolutely believe that if you want to have the right corporate culture, if you want the dynamism that encourages entrepreneurs and small businesses to start, then lower the taxes that people have to pay before they make a dime in profit, can be very beneficial.

The Treasury said legislation would be introduced in the 2022 Autumn Finance Bill to set the threshold for the additional rate of income tax at £125,140 for 2023/24 until 2027/28.

Indeed, the personal allowance is set at £12,570 until 2027/28.

This means the 629,000 people already in the top rate bracket will pay just under £1,250 more in tax.

Impact on net pay of the reduction in the tax threshold of the rate above £125,140

Salary Tax before tax after Impact
£130,000 £44,460 £44,703 £243
£135,000 £46,460 £46,953 £493
£140,000 £48,460 £49,203 £743
£145,000 £50,460 £51,453 £993
£150,000 £52,460 £53,703 £1,243
£160,000 £56,960 £58,203 £1,243
£170,000 £61,460 £62,703 £1,243
£180,000 £65,960 £67,203 £1,243
£190,000 £70,460 £71,703 £1,243
£200,000 £74,960 £76,203 £1,243

Source: Quilters

The legislative default will then be that the additional rate threshold increases according to any future increase in the personal allowance.


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