MNI BRIEF: UK Sunak Cushions Tax Hit, Income Tax Cut By 2024

Chancellor of the Exchequer Rishi Sunak unveiled measures to soften the impact from his planned increase in payroll taxes and unveiled a 1% income tax cut by 2024, while saying nothing about increasing defence spending. The measures Sunak announced in his mini-Budget, the Spring Statement, partially offset some of the projected increase in the cost of living.

His headline grabbing announcement was that the basic rate of income tax would be cut from 20% to 19% before the end of the current parliament in 2024. He also announced a more rapid increase in the threshold for National Insurance Contributions, a payroll tax, increasing it by GBP3,000 but he did not scrap the planned 1.25% increase on both employees and employers in NICS, set to kick-in in April.

Sunak said that the income tax cut in 2024 was justifiable with the Office for Budget Responsibility, the official forecaster, seeing borrowing back on track and inflation back down around target in 2024, although the OBR forecasts do not fully account for the likely effects of the Ukraine war and point to an "unusually high uncertainty around the outlook".