Jeremy Hunt 'to cut National Insurance by 2p' in Budget as tax boost for workers
5 March 2024, 13:38 | Updated: 5 March 2024, 15:35
Jeremy Hunt is expected to cut the rate of national insurance by 2p in his spring Budget saving millions of workers hundreds of pounds a year.
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Reports say the £10 billion move would save 27 million workers an extra £450 a year. The chancellor also cut the rate in November's autumn statement.
He will sell the move as a £900 overall tax cut to workers when combined with the two percentage point cut that was announced in November.
The chancellor is poised to make national insurance a key measure in the spring Budget after deciding against cutting income tax.
Cutting income tax is much more expensive than reducing percentage points in employee National Insurance.
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A cut of two percentage points in employee National Insurance costs around £10 billion a year, whilst cutting 2p in income tax would cost £3.7 billion more.
This tax break is expected to come in April, according to The Times - which has not been denied by Treasury sources.
The opposition party expects Mr Hunt to take its policy of ending non-dom status, which Labour said it would use to fund most of the spending in government, to partly fund the move.
However, the Institute for Fiscal Studies has urged Mr Hunt to "tread carefully", and has warned of scrapping the tax status.
This allows foreign nationals living in Britain to avoid paying tax on overseas earnings and by scrapping the scheme, Mr Hunt risks driving wealthy people out of the country.
On Sunday, Mr Hunt said he is aiming to build on autumn’s reduction in national insurance contributions but will only cut taxes in a "prudent, responsible and affordable way".
Speaking to LBC's Matthew Wright, Mr Hunt said his Budget was intended to help grow the economy in the long term, allowing for tax cuts later.
Chancellor Jeremy Hunt joins Matthew Wright ahead of the Budget
"Overall, I think what people want is not gimmicks, they want a long-term, responsible, sensible plan to grow the economy so we can bring down taxes and have enough money for public services in the future - and that's what I'll be delivering," he said.
Mr Hunt continued to say his approach to cutting tax is "very straightforward".
"If you look around the world, the countries that are growing the fastest tend to be the ones with lower taxes," he said.
"We need to boost our growth... but I will only ever cut taxes in a way that is prudent, responsible and affordable.
On Tuesday morning, the King held an in-person pre-budget audience at Buckingham Palace.
The monarch, who is being treated for cancer, has continued with his duties as head of state of meeting with Mr Hunt.
Usually, the audience is private but this time the King was photographed shaking hands with the chancellor in the private audience room.
