Rishi Sunak is reportedly contemplating a tax reduction for the top five million earners and a potential reduction in stamp duty as a strategic move to alleviate the political pressure he’s facing following two significant byelection losses.
These losses included the historic defeat of the Conservative party in the Mid Bedfordshire byelection, which saw Labour secure an unexpected victory, and the Tories losing Tamworth in Staffordshire.
The Daily Telegraph has reported that Downing Street has conducted surveys to determine which tax cut could provide the Conservative party with the most significant pre-election boost. The 2024 spring budget is considered the earliest occasion for such an announcement. It’s worth noting that Sunak previously froze income tax thresholds for a six-year period during his tenure as Chancellor.
Additionally, the Conservatives are considering the possibility of reducing stamp duty in their upcoming general election manifesto if the economy shows signs of improvement. According to sources cited by The Times, they are contemplating either cutting stamp duty or completely abolishing inheritance tax.
A senior Conservative party member highlighted that reducing stamp duty would be seen as an “aspirational” move and could have a positive impact on the economy while also attracting middle-class voters who have drifted away from the party.
As it stands, stamp duty in England and Northern Ireland is set at 5% for primary residences valued between £250,001 and £925,000, increasing to 10% for properties priced between £925,001 and £1,500,000.
The pressure to announce tax cuts before the next election has intensified, as recent figures indicate that government borrowing was lower than anticipated in the previous month. This improvement is attributed to a substantial reduction in the Treasury’s debt interest expenses and strong tax receipts. Official data reveals that public sector net borrowing for the last month was £14.3 billion, which is below the Office for Budget Responsibility’s forecast of £20.5 billion.
