FT-Chancellor Mulls Cut To Top Rate Income Tax Threshold

TheFT is reporting that Chancellor of the Exchequer Jeremy Hunt is considering a cut to the earnings threshold required to start paying the top 45% rate of income tax as part of his autumn statement to be delivered on 17 November.

• The autumn statement has been heavily trailed as one set to include sizable tax hikes and public spending cuts in order to fill the hole in gov't finances.
• An outright increase in the additional rate of income tax would breach the Conservatives 2019 manifesto commitment and is therefore seen as being off the cards.
• The move would mark the ultimate reversal within gov't from the ill-fated mini-budget of former Chancellor Kwasi Kwarteng, which sought to eliminate the additional rate of taxation - a move that in combination with other tax cutting measures and lack of revenue raising saw markets tumble and the gov't of PM Liz Truss ousted from power.
• While markets are likely to prove accepting of measures such as this mooted threshold cut, it could cause PM Rishi Sunak some difficulty on the backbenches. Economic right-wingers in the governing centre-right Conservative party viewed as staunchly opposed to so-called 'stealth taxes' such as threshold cuts could begin to vocally oppose such policies following their announcement.
• This could cause Sunak concern at a point when he has already lost one gov't minister (Minister without Portfolio Sir Gavin Williamson) and there is notable pressure on another (Home Secretary Suella Braverman).