Jeremy Hunt hints more tax cuts could be announced in Budget this March

19 January 2024 , 09:54

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Chancellor Jeremy Hunt at the World Economic Forum (Image: AFP via Getty Images)

Jeremy Hunt has dropped further hints about cutting taxes in the Budget this spring.

The Chancellor said tax cuts would be “the direction of travel” and commented that low-tax countries were “more dynamic” and “more competitive”. However, he cautioned that it is “too early to say” if tax cuts will definitely be announced during the Budget on March 6.

His comments came as he tried to lure investment for Britain at the World Economic Forum in Davos, Switzerland. Mr Hunt said: “In terms of the direction of travel we look around the world and we note that the economies growing faster than us in North America and Asia tend to have lower taxes, and I believe fundamentally that low-tax economies are more dynamic, more competitive and generate more money for public services like the NHS. That’s the direction of travel we would like to go in but it is too early to say what we are going to do.”

The Chancellor announced a National Insurance cut during his Autumn Statement, with the main rate for employees reduced from 12% to 10% on January 6. However, the threshold for when you start paying National Insurance - which is currently set at £12,570 - remains frozen until April 2028. This means more people still risk being dragged into paying tax for the first time when they get a pay rise.

The BBC reports that Mr Hunt could instead focus on making changes to Income Tax in the Budget. Tax thresholds normally rise in line with inflation, the rate at which prices increase, but they have been kept the same since 2021.

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This week, it was confirmed that inflation unexpectedly rose to 4% in the year to December, up from the 3.9% that was recorded in November. Economists had forecast a drop to 3.8%. But despite the slight increase, the Chancellor maintained that the Government plan "is working".

He said: “As we have seen in the US, France and Germany, inflation does not fall in a straight line, but our plan is working and we should stick to it. We took difficult decisions to control borrowing and are now turning a corner, so we need to stay the course we have set out, including boosting growth with more competitive tax levels.”

Levi Winchester