>Liz Truss is considering boosting the take home pay of the UK’s highest 10 per cent of earners with a tax cut that could see the basic rate threshold rise to £80,000, i can reveal.
>
>Treasury sources have told ithat Ms Truss, who is widely expected to be confirmed as the nation’s next Prime Minister, is keen on cancelling Rishi Sunak’s freezing of the 40 per cent tax threshold at £50,270 and raising it by around £30,000.
>
>The move would mean that those earning between £12,570 and £80,000 would pay just 20 per cent on their earnings on tax, while those earning less than £12,570 would continue to be exempt from income tax.
>
>The tax cut will mean around three million people will no longer pay higher rate tax, saving them an average of around £3,000 a year. The saving will be around £6,000 for someone on an annual salary of £80,000 or more.
>
>It is understood that the current Chancellor Nadhim Zahawi has prepared a document of possible tax-cutting measures for Ms Truss among a wider list of strategies to help households through the sharp rises in energy costs this winter.
>
>An adviser to the Treasury told i: “The current Chancellor has prepared some ideas for the next Prime Minister to consider, and one has gone down particularly well within the Truss camp. Raising the 40 per cent tax threshold to £80,000.”
>
>Throughout the two-month Tory leadership campaign Ms Truss has consistently stated that she believes tax cuts will “put money back in people’s pockets” and that she believes this will “fuel growth in the economy”.
>
>The idea of raising the 20 per cent tax threshold to £80,000 comes from outgoing Prime Minister Boris Johnson, who said he would pursue the strategy during his own leadership campaign in 2019. Despite pledging the tax cut in June 2019, the policy did not appear in his general election manifesto six months later.
>
>Another Treasury source said: “It’s something the new prime minister will consider and is one of a number of tax-cutting policies. There are also several options for the Government to consider when it comes to helping people through the cost-of-living crisis, from straightforward payments to households, to more targeting funding through the benefits system and a long-term bond to fund energy companies who can spread the rises in household bills over decades.”
>
>Liz Truss is expected to reverse many of the tax rises implemented by her leadership rival and former Chancellor Rishi Sunak (Photo: Hannah McKay/Reuters)
>
>Liz Truss is expected to reverse many of the tax rises implemented by her leadership rival and former Chancellor Rishi Sunak (Photo: Hannah McKay/Reuters)
>
>One leading tax expert claimed those dragged into paying upper rate tax by Mr Sunak’s freezing of the threshold were also “being squeezed” as inflation impacts even “those considered to live in well-off households”.
>
>Nimesh Shah, chief executive of tax and advisory firm Blick Rothenberg, said: “Something needs to be done around raising the basic rate threshold because that threshold has been raised by around just £6,500 over the last ten years and many people have been dragged into paying higher rate tax as a result.”
>
>The number of people paying 40 per cent tax – or 45 per cent for those earning more than £150,000 – has risen from 4.25 million to more than 6.1 million workers since 2019.
>
>Mr Shah added: “Many of these people are those who also were hit by the child benefit clawback, which came in in 2013. The tax burden for that middle income group is as high as it’s ever been.
>
>“There’s going to be more targeted support for people on universal credit, and the Government is right to target that demographic. We’ve already seen how the reversal of Mr Sunak’s national insurance rise is going to the very top earners. So, where’s the help for that middle tier? Raising the 40 per cent tax threshold is certainly a strong option to do that.”
>
>Mr Shah added that by raising the higher rate tax threshold Ms Truss is likely to reverse the national insurance rise only for those earning less than £50,270, thereby abandoning her pledge to make it a universal tax cut.
>
>“I think Ms Truss will reverse the 1.25 per cent national insurance increase for people earning less £50,270, and increase the basic rate income tax threshold to £80,000,” he said. “This would mean the tax cuts are targeted at lower and middle earners, but higher earners would still enjoy a benefit.”
>
>Matthew Lesh, head of public policy at the Institute of Economic Affairs, backed the move to raise the point at which people begin to pay 40 per cent tax.
>
>“The Conservatives were elected on a manifesto promising not to raise income taxes – yet have increased national insurance and, by freezing the income tax thresholds, introduced another tax increase by stealth,” said Mr Lesh.
>
>“The higher rates for middle income earners disincentivises work and burdens millions of taxpayers.
>
>“The return to the previous commitment would be a welcome step. While this could be debt-financed in the short run, there is also a need in the longer run for spending restraint to fund lower taxes.”
>
>If Ms Truss pushes ahead with raising the basic rate of tax threshold she will add around £10bn to her tax cutting policies, which some economists have claimed will blow a £60bn hole in public finances.
>
>The Office of Budget Responsibility believes that on current spending the Government will be left with a surplus of £30bn in its coffers. Ms Truss’ policies could add £40bn to public debt, which already stands at almost £2.5trn.
>
>Ms Truss’ campaign team was contacted for comment.
And so it begins. FFS.
Welcome to the beginning of the end.
So here’s the breakdown on how the government is going to tackle the cost of living crisis:
Richest households – £4800 better off
Poorest households – £7 better off
With the energy crisis, any sort of tax cut for anyone, it will be swallowed up almost immediately.
Genuinely scary times for everyone in the country who isn’t rich.
Fiscal drag has been awful. Hopefully it’s addressed.
At least Scotland can avoid that mess.
Yes, can we have retrospective taxes from the start of the year on this? please and thank you
Excellent news
> “There’s going to be more targeted support for people on universal credit, and the Government is right to target that demographic. We’ve already seen how the reversal of Mr Sunak’s national insurance rise is going to the very top earners. So, where’s the help for that middle tier? Raising the 40 per cent tax threshold is certainly a strong option to do that.”
They actually think that anyone who isn’t well into the 40% tax bracket is on benefits.
That will totally help out those most in need.
You see, cutting taxes on the wealthy will allow them to have more money for alms on Sunday and more tip money for those in service. It will stimulate displays of noblesse oblige.
Whilst the lowest earners get told to buy a £20 kettle to save a tenner a year.
​
Fuck it, go full victorian. At least, Jacob Reese Mogg will be happy when most of us die from overworking for a pittance.
Classic Tory policy.
If you earn under £30k and you voted for these guys, *you’re a fucking dumb cunt*.
I mean if you wanted to help everyone, and you were dead set on tax cuts (grey in and of itself), you could raise the tax free threshold a few grand, but nah, just raise the 40% threshold so all of the benefit only goes to those least affected why don’t ya?
Fuck off…
Why do people never ask who’ll pay for it when it benefits the rich?
She really is just going to stick around for six months to make the rich richer, destroy some rights and then fuck off into the sunset isn’t she?
The tax bands should really rise with inflation, but for everyone. Keeping them where they have been for the past few years is effectively increasing taxation by stealth.
State of those people who heard “we’re taking back control” in 2016 and thought “we” meant them.
How similar are Tories and (US) Republicans. Their first instinct upon gaining office is to cut taxes on the rich.
It’s long overdue adjustment. I know many skilled workers who are being ripped off by the tax man and they are struggling. Top 10% earners sounds like this is about the rich, but of that 10% the rich are maybe the top 0.1%. The rest are skilled workers who worked hard to get there and many don’t have a huge wealth. It seems like this is a concerted effort to get workers fight among themselves while the actual rich get away without paying taxes.
I wonder if she is trying to deliver a swift kick to the SNP here. She already voiced her contempt.
The SNP will. Never follow this policy and already have higher taxes than Ruk. If this gets raised to £80k Scotland won’t follow. That will make them very unpopular with anyone earning over £43k. Either a brain drain or a loss of voter support or both. The difference would be something like £7,800 for someone on £80k. £650/month is worth considering a move south.
Then again I highly doubt she cares what happens north of the border.
The backlash to this might be a little overblown. Up to £80k is clearly no help for the poor but given the inflation we have its hardly “rich people” territory any more.
Hopefully she raises the minimum threshold alongside this so that everyone can benefit.
Really hope this happens. Middle class has been totally squeezed for years. No child benefit, no warm home discounts, tax rises. Would be nice to be thrown a bone for once rather than be thrown to the wolves because I chose to work hard and better myself.
24 comments
**Article contents**
>Liz Truss is considering boosting the take home pay of the UK’s highest 10 per cent of earners with a tax cut that could see the basic rate threshold rise to £80,000, i can reveal.
>
>Treasury sources have told ithat Ms Truss, who is widely expected to be confirmed as the nation’s next Prime Minister, is keen on cancelling Rishi Sunak’s freezing of the 40 per cent tax threshold at £50,270 and raising it by around £30,000.
>
>The move would mean that those earning between £12,570 and £80,000 would pay just 20 per cent on their earnings on tax, while those earning less than £12,570 would continue to be exempt from income tax.
>
>The tax cut will mean around three million people will no longer pay higher rate tax, saving them an average of around £3,000 a year. The saving will be around £6,000 for someone on an annual salary of £80,000 or more.
>
>It is understood that the current Chancellor Nadhim Zahawi has prepared a document of possible tax-cutting measures for Ms Truss among a wider list of strategies to help households through the sharp rises in energy costs this winter.
>
>An adviser to the Treasury told i: “The current Chancellor has prepared some ideas for the next Prime Minister to consider, and one has gone down particularly well within the Truss camp. Raising the 40 per cent tax threshold to £80,000.”
>
>Throughout the two-month Tory leadership campaign Ms Truss has consistently stated that she believes tax cuts will “put money back in people’s pockets” and that she believes this will “fuel growth in the economy”.
>
>The idea of raising the 20 per cent tax threshold to £80,000 comes from outgoing Prime Minister Boris Johnson, who said he would pursue the strategy during his own leadership campaign in 2019. Despite pledging the tax cut in June 2019, the policy did not appear in his general election manifesto six months later.
>
>Another Treasury source said: “It’s something the new prime minister will consider and is one of a number of tax-cutting policies. There are also several options for the Government to consider when it comes to helping people through the cost-of-living crisis, from straightforward payments to households, to more targeting funding through the benefits system and a long-term bond to fund energy companies who can spread the rises in household bills over decades.”
>
>Liz Truss is expected to reverse many of the tax rises implemented by her leadership rival and former Chancellor Rishi Sunak (Photo: Hannah McKay/Reuters)
>
>Liz Truss is expected to reverse many of the tax rises implemented by her leadership rival and former Chancellor Rishi Sunak (Photo: Hannah McKay/Reuters)
>
>One leading tax expert claimed those dragged into paying upper rate tax by Mr Sunak’s freezing of the threshold were also “being squeezed” as inflation impacts even “those considered to live in well-off households”.
>
>Nimesh Shah, chief executive of tax and advisory firm Blick Rothenberg, said: “Something needs to be done around raising the basic rate threshold because that threshold has been raised by around just £6,500 over the last ten years and many people have been dragged into paying higher rate tax as a result.”
>
>The number of people paying 40 per cent tax – or 45 per cent for those earning more than £150,000 – has risen from 4.25 million to more than 6.1 million workers since 2019.
>
>Mr Shah added: “Many of these people are those who also were hit by the child benefit clawback, which came in in 2013. The tax burden for that middle income group is as high as it’s ever been.
>
>“There’s going to be more targeted support for people on universal credit, and the Government is right to target that demographic. We’ve already seen how the reversal of Mr Sunak’s national insurance rise is going to the very top earners. So, where’s the help for that middle tier? Raising the 40 per cent tax threshold is certainly a strong option to do that.”
>
>Mr Shah added that by raising the higher rate tax threshold Ms Truss is likely to reverse the national insurance rise only for those earning less than £50,270, thereby abandoning her pledge to make it a universal tax cut.
>
>“I think Ms Truss will reverse the 1.25 per cent national insurance increase for people earning less £50,270, and increase the basic rate income tax threshold to £80,000,” he said. “This would mean the tax cuts are targeted at lower and middle earners, but higher earners would still enjoy a benefit.”
>
>Matthew Lesh, head of public policy at the Institute of Economic Affairs, backed the move to raise the point at which people begin to pay 40 per cent tax.
>
>“The Conservatives were elected on a manifesto promising not to raise income taxes – yet have increased national insurance and, by freezing the income tax thresholds, introduced another tax increase by stealth,” said Mr Lesh.
>
>“The higher rates for middle income earners disincentivises work and burdens millions of taxpayers.
>
>“The return to the previous commitment would be a welcome step. While this could be debt-financed in the short run, there is also a need in the longer run for spending restraint to fund lower taxes.”
>
>If Ms Truss pushes ahead with raising the basic rate of tax threshold she will add around £10bn to her tax cutting policies, which some economists have claimed will blow a £60bn hole in public finances.
>
>The Office of Budget Responsibility believes that on current spending the Government will be left with a surplus of £30bn in its coffers. Ms Truss’ policies could add £40bn to public debt, which already stands at almost £2.5trn.
>
>Ms Truss’ campaign team was contacted for comment.
And so it begins. FFS.
Welcome to the beginning of the end.
So here’s the breakdown on how the government is going to tackle the cost of living crisis:
Richest households – £4800 better off
Poorest households – £7 better off
With the energy crisis, any sort of tax cut for anyone, it will be swallowed up almost immediately.
Genuinely scary times for everyone in the country who isn’t rich.
Fiscal drag has been awful. Hopefully it’s addressed.
At least Scotland can avoid that mess.
Yes, can we have retrospective taxes from the start of the year on this? please and thank you
Excellent news
> “There’s going to be more targeted support for people on universal credit, and the Government is right to target that demographic. We’ve already seen how the reversal of Mr Sunak’s national insurance rise is going to the very top earners. So, where’s the help for that middle tier? Raising the 40 per cent tax threshold is certainly a strong option to do that.”
They actually think that anyone who isn’t well into the 40% tax bracket is on benefits.
That will totally help out those most in need.
You see, cutting taxes on the wealthy will allow them to have more money for alms on Sunday and more tip money for those in service. It will stimulate displays of noblesse oblige.
Whilst the lowest earners get told to buy a £20 kettle to save a tenner a year.
​
Fuck it, go full victorian. At least, Jacob Reese Mogg will be happy when most of us die from overworking for a pittance.
Classic Tory policy.
If you earn under £30k and you voted for these guys, *you’re a fucking dumb cunt*.
I mean if you wanted to help everyone, and you were dead set on tax cuts (grey in and of itself), you could raise the tax free threshold a few grand, but nah, just raise the 40% threshold so all of the benefit only goes to those least affected why don’t ya?
Fuck off…
Why do people never ask who’ll pay for it when it benefits the rich?
She really is just going to stick around for six months to make the rich richer, destroy some rights and then fuck off into the sunset isn’t she?
The tax bands should really rise with inflation, but for everyone. Keeping them where they have been for the past few years is effectively increasing taxation by stealth.
State of those people who heard “we’re taking back control” in 2016 and thought “we” meant them.
How similar are Tories and (US) Republicans. Their first instinct upon gaining office is to cut taxes on the rich.
It’s long overdue adjustment. I know many skilled workers who are being ripped off by the tax man and they are struggling. Top 10% earners sounds like this is about the rich, but of that 10% the rich are maybe the top 0.1%. The rest are skilled workers who worked hard to get there and many don’t have a huge wealth. It seems like this is a concerted effort to get workers fight among themselves while the actual rich get away without paying taxes.
I wonder if she is trying to deliver a swift kick to the SNP here. She already voiced her contempt.
The SNP will. Never follow this policy and already have higher taxes than Ruk. If this gets raised to £80k Scotland won’t follow. That will make them very unpopular with anyone earning over £43k. Either a brain drain or a loss of voter support or both. The difference would be something like £7,800 for someone on £80k. £650/month is worth considering a move south.
Then again I highly doubt she cares what happens north of the border.
The backlash to this might be a little overblown. Up to £80k is clearly no help for the poor but given the inflation we have its hardly “rich people” territory any more.
Hopefully she raises the minimum threshold alongside this so that everyone can benefit.
Really hope this happens. Middle class has been totally squeezed for years. No child benefit, no warm home discounts, tax rises. Would be nice to be thrown a bone for once rather than be thrown to the wolves because I chose to work hard and better myself.