The Chancellor told the World Economic Forum that he believed voters were “very angry”; on high taxes under Tories Credit: FABRIS COFRINI/AFP
Tory MPs are pushing for income tax cuts rather than cuts to inheritance tax in the next Budget, The Telegraph has been told.
Speaking in Davos at This week Jeremy Hunt indicated that he will present a financial report on tax cuts in March.
The Chancellor is understood to be weighing whether to scrap inheritance tax or adjust income tax, which could lead to an increase in the level at which basic rate is charged or a rise in the 40p threshold.
Mr Hunt also is considering Further cuts to the department's spending are planned to finance tax cuts, The Telegraph reports.
This comes as the Treasury considers passing a second budget before the next election, if a vote is scheduled for the autumn.
>< p>Some 24 of 30 Conservative Party members contacted by The Telegraph said cutting income tax should be a priority, while four backed an inheritance tax and the rest declined to express their preference.
Official figures show that the income tax cut will benefit many more people, with 29 million adults paying the 20 percent basic rate and 6.6 million paying the additional 40 percent rate.
>Cutting income tax will also have a more immediate impact on people's finances than cutting inheritance tax, which could help the Tories argue they are rewarding work ahead of the general election.
However, according to polls, inheritance tax is extremely unpopular among the population, and The Daily Telegraph has long advocated its abolition.
Labor insiders admitted the party was less likely to go along with the Tories' pledge to scrap the tax. an inheritance tax creating a dividing line between party and opposition.
Earlier this week, Rachel Reeves, the shadow chancellor, hinted at tax cuts for the richest.
Speaking in Davos, Ms Reeves said freezing income tax thresholds in the face of rising inflation “has affected people paying top and basic rate tax, both groups of people working hard but getting paid less every time.” monthly in their pay packets.”
She added: “My intuition is to cut taxes.”
In response to The Telegraph, politicians from both of the most right-wing New Conservatives, a group of Tory MPs, and the more moderate One Nation group, spoke in favor of cutting income tax.
Jonathan Gallis, a New Conservative member who won the Red Wall seat for Stoke-on-Trent North in 2019, said: “We need to reward hard work and the best way to do that is by allowing people to save more of it. hard-earned money.”
Matt Warman of the One Nation Conservative party said the group is “not focused on ideology, but on the central core of cutting taxes for the many rather than the few.”
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Marco Longhi, MP for Dudley North, said: “I hate inheritance tax because people were already taxed during their lifetime, but choices have to be made and I'd rather see a reduction in the overall tax that everyone pays than that very few people pay.”
Another senior Conservative said he would prefer to see a cut to inheritance tax rather than income tax as it would be “feasible, affordable and something Labor won't be able to copy” .
Inheritance tax is levied at 40 per cent on properties valued at more than £325,000, or £500,000 if the inheritance includes a main residence left to a child or grandchild.
A married couple can split this allowance, and this means that an estate worth £1 million can be transferred without the beneficiaries losing any money to the tax authorities.
As a result, only 4 percent of UK households have to pay into inheritance. tax every year, although it was forecast to generate £8 billion for the Treasury in 2023.
More than three in five people pay income tax, and it will generate around £268 billion for the Treasury by the end of this financial year.
Speaking at the World Economic Forum on Thursday, Mr Hunt acknowledged voters were “very unhappy” with the Conservative government's high tax rates and said he would focus on “policies that promote economic growth” next year.
He said: “In terms of direction of travel, we look around the world and note that the economies that are growing faster than us, the economies of North America and Asia, tend to have lower taxes.”
Mr Hunt has signaled that lower-than-expected interest rates could leave room for a more generous tax cut in March than anticipated during his autumn statement last year.
The Chancellor is willing to push for a smaller rise taxes in March. The Telegraph understands departmental spending budgets will be constrained for the rest of the decade unless the worsening economy allows him to cut taxes.
Under current plans, daily government spending limits will rise by 0.9% in real terms until 2028-2029.
“We might give it up if it gives us more options to cut taxes,” said one Whitehall source.
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