Chancellor Jeremy Hunt urged to cut taxes

New figures from the Daily Express show that the UK Treasury is set to receive record revenues, with an additional £40 billion expected this year. The increase in revenue is largely due to the freeze in tax and national insurance thresholds, which has resulted in higher tax payments from workers and pensioners. As a result, Chancellor Jeremy Hunt is under pressure to use this surplus to provide a much-needed tax cut in the upcoming Autumn budget.

The freeze in tax thresholds is causing a significant burden for ordinary British workers and pensioners, who are being hit by higher income tax rates. Campaigners are calling for a break for taxpayers and a reduction in the overall tax burden, which is currently at a 70-year high. Members of Parliament are calling on the Chancellor to show support for hardworking British taxpayers by slashing taxes in the Autumn budget.

Soaring wages and frozen tax allowances lead to increased tax payments

The combination of rising wages and frozen tax allowances is leading to more individuals paying tax at higher rates, a process known as fiscal drag. The freeze in income tax and national insurance allowances, introduced in 2021, is equivalent to a 4p increase in the basic rate of income tax. This means that more than eight million pensioners now have to pay income tax, and the number is expected to increase further.

The unexpected increase in wages and frozen tax allowances means that the Treasury will receive an additional £30 billion this financial year, with HM Revenue & Customs receipts set to rise even further. This additional revenue provides Chancellor Jeremy Hunt with the opportunity to deliver much-needed tax cuts or reverse some of the previous measures that have increased the tax burden on individuals and households.

Calls for tax cuts to ease the pressure on workers during the cost-of-living crisis

There is growing pressure on Chancellor Jeremy Hunt to ease the financial burden on workers during the ongoing cost-of-living crisis by cutting taxes. Backbench MPs are urging the government to show that they are on the side of hardworking British taxpayers by reducing levies in the Autumn budget.

David Jones, Tory MP for Clwyd West, hopes that the Chancellor will signal his intention to cut personal taxes and deliver economic growth in the upcoming Autumn Statement. Similarly, Jonathan Gullis, Tory MP for Stoke-on-Trent North, emphasizes the importance of allowing individuals to keep more of their hard-earned money, especially during challenging times such as the Covid-19 pandemic and the cost-of-living crisis.

The impact of fiscal drag and tax freezes on individuals and pensioners

Fiscal drag, which occurs when tax thresholds do not rise with inflation, is resulting in individuals paying more income tax and national insurance over time. This is particularly affecting middle earners, as well as teachers, nurses, and electricians who are being pushed into higher tax brackets.

The freeze on income tax and national insurance allowances means that more pensioners are now required to pay income tax, with over eight million currently contributing. The freezing of tax thresholds has also had an impact on individuals’ savings, as higher interest rates and frozen Personal Savings Allowances (PSA) have resulted in almost three million savers facing tax on their earnings.

The need for tax cuts and relief for hardworking taxpayers

The ongoing cost-of-living crisis and rising prices have put a significant strain on individuals and households. The combination of fiscal drag and frozen tax allowances has further exacerbated this financial burden. The freeze on income tax and national insurance thresholds has led to an increase in tax payments, particularly for middle earners and pensioners.

Campaigners and members of Parliament are urging Chancellor Jeremy Hunt to use the surplus tax revenue to provide tax cuts and relief for hardworking British taxpayers. The government has an opportunity to demonstrate its support for individuals and households by easing the financial pressure through tax reductions. This would provide much-needed relief during challenging times and help stimulate economic growth.