Jeremy Hunt is reportedly considering stamp duty and national insurance cuts before the next general election. The chancellor has previously hinted there could be another “fiscal event” before voters go to the polls in an attempt to boost the Conservatives’ tax-cutting credentials. The Times reported that the Treasury was considering plans to increase the threshold at which people buying a house would need to pay stamp duty from £250,000 to £300,000 in the pre-election autumn statement, meaning nearly half of new homebuyers would not pay the tax. It is believed the move would cost about £3bn a year by the end of the decade.
Stamp duty cuts were considered for the spring budget but axed in favour of a 2p cut in national insurance, the Times reported. Another pre-election “fiscal event” reportedly under consideration is a further 2p cut in national insurance. A government official with direct knowledge of the plans told the Financial Times: “The Treasury is working towards a September fiscal event and will try to cut national insurance by another 2p. That’s the plan.” Hunt also told the FT this week that he would like to cut taxes in an autumn fiscal event “if we can”, despite warnings from the International Monetary Fund that voter giveaways would make reducing the UK’s national debt more difficult. If a further 2p cut in national insurance goes ahead, the main NI contribution rate will have been halved from 12% to 6% since November 2023. It is thought another 2p cut would cost about £9bn. Rishi Sunak pledged last month to cut national insurance entirely, a move that could leave a £40bn hole in the public finances and hit already crumbling services. The director of the Institute for Fiscal Studies, Paul Johnson, described the pledge as “not worth the paper it’s written on unless accompanied by some sense of how it will be afforded”. The last two national insurance cuts, which added about £900 a year to the pockets of someone on the average wage, did little to boost the Conservatives’ standing in the polls. Ipsos found a record low of 19% of voters backing the Tories in a recent survey. The possible cuts come as experts sound the alarm about the dire state of UK public services. Eight councils in England have declared bankruptcy since 2018, including four – Woking, Nottingham, Birmingham and Thurrock – in the past 18 months. Nearly one in 10 councils are expected to declare bankruptcy this year, a poll by the Local Government Information Unit found. Hunt’s pre-election tax cut plans will be put under the microscope next month when the IMF conducts its in-depth look at the UK economy. IMF officials said the team sent to London for its annual health check would be looking closely at whether tax increases or spending cuts would be needed after the general election. A date for the next general election has not yet been set. A Treasury spokesperson said “any fiscal events would be announced in the usual way”.