UK Chancellor Philip Hammond is reportedly considering whether to ditch a Conservative Party manifesto commitment to raise the income tax threshold.
At the 2017 general election, the Party promised to increase the personal allowance - the amount of income someone can earn before paying tax - to £12,500 (US$16,523) and the higher rate to £50,000 (US$66,093) by 2020.
But a senior Tory source has now claimed the pledge is “up for grabs”. Hammond is said to be considering whether to postpone or even scrap the increases when he delivers the Budget on 29 October in an attempt to find the cash for Theresa May’s £20 billion (US$26 billion) pledge to provide more funding to the National Health Service (NHS).
"We will always be a party of low tax. But the prime minister’s priorities have changed,” the source said. "We have made a huge spending commitment here, which will be transformational for the NHS. But it has to be paid for and the Budget will reflect that."
The freeze would prevent tax cuts that were promised to millions of voters. The current personal tax allowance stands at £11,850 (US$15,664) a year. Failure to raise it to £12,500 (US$16,523) would cost every basic rate taxpayer £130 (US$172) a year, according to the Daily Mail.
The move would place Hammond on a collision course with many Tory MPs who believe the party must stick to its election promises, the Daily Telegraph said.
The Chancellor is also considering whether to revive a controversial VAT change for small businesses that could raise a further £2 billion (US$2.64 billion). But Treasury sources played down speculation that he will go ahead with a raid on the pensions of the better-off.
Instead it is thought he may also increase the VAT threshold for small firms. Cutting the threshold from £85,000 (US$112,359) to £43,000 (US$56,840) would hit half a million firms and boost Treasury receipts by £1 billion (US$1.3 billion) to £1.5 billion (US$1.98 billion) a year.
Mike Cherry, of the Federation of Small Businesses, warned Mr Hammond against a “blatant tax grab”.
Finally, according to HR Magazine, the Treasury is finalising plans to overhaul tax rules for the self-employed, in the belief that a third of people claiming self-employed status as a 'personal service company' are actually full employees and should pay more tax. It is looking at ordering firms that use personal service company contractors to take legal responsibility for ensuring 'off-payroll' contractors stick to the tax rules known as IR35.
Emma Woollacott is a freelance business journalist. Her work has appeared in a wide range of publications, including the Guardian, the Times, Forbes and the BBC.
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UK Chancellor Philip Hammond is reportedly considering whether to ditch a Conservative Party manifesto commitment to raise the income tax threshold.
At the 2017 general election, the Party promised to increase the personal allowance - the amount of income someone can earn before paying tax - to £12,500 (US$16,523) and the higher rate to £50,000 (US$66,093) by 2020.
But a senior Tory source has now claimed the pledge is “up for grabs”. Hammond is said to be considering whether to postpone or even scrap the increases when he delivers the Budget on 29 October in an attempt to find the cash for Theresa May’s £20 billion (US$26 billion) pledge to provide more funding to the National Health Service (NHS).
"We will always be a party of low tax. But the prime minister’s priorities have changed,” the source said. "We have made a huge spending commitment here, which will be transformational for the NHS. But it has to be paid for and the Budget will reflect that."
The freeze would prevent tax cuts that were promised to millions of voters. The current personal tax allowance stands at £11,850 (US$15,664) a year. Failure to raise it to £12,500 (US$16,523) would cost every basic rate taxpayer £130 (US$172) a year, according to the Daily Mail.
The move would place Hammond on a collision course with many Tory MPs who believe the party must stick to its election promises, the Daily Telegraph said.
The Chancellor is also considering whether to revive a controversial VAT change for small businesses that could raise a further £2 billion (US$2.64 billion). But Treasury sources played down speculation that he will go ahead with a raid on the pensions of the better-off.
Instead it is thought he may also increase the VAT threshold for small firms. Cutting the threshold from £85,000 (US$112,359) to £43,000 (US$56,840) would hit half a million firms and boost Treasury receipts by £1 billion (US$1.3 billion) to £1.5 billion (US$1.98 billion) a year.
Mike Cherry, of the Federation of Small Businesses, warned Mr Hammond against a “blatant tax grab”.
Finally, according to HR Magazine, the Treasury is finalising plans to overhaul tax rules for the self-employed, in the belief that a third of people claiming self-employed status as a 'personal service company' are actually full employees and should pay more tax. It is looking at ordering firms that use personal service company contractors to take legal responsibility for ensuring 'off-payroll' contractors stick to the tax rules known as IR35.
Emma Woollacott is a freelance business journalist. Her work has appeared in a wide range of publications, including the Guardian, the Times, Forbes and the BBC.
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