Two million low income couples could be in for a £2,500 boost in Friday’s emergency Budget.
PM Liz Truss wants to allow the transfer of all personal tax allowances between married couples and civil partners where one earns below the £12,570 tax free threshold.
Now, a lower earner can “gift” £1,260 of allowance – saving £214 tax after adjustments. That could rise tenfold.
Chancellor Kwasi Kwarteng is studying the figures to see whether he can afford the extra £5.8billion now – or wait until the full Budget later this year.
He will definitely axe April’s National Insurance rise and reverse a planned hike in corporation tax from 19% to 25%. The joint cost will be £30billion.
A limit on bankers’ bonuses, now capped at 200% of salary, is expected to go. Mr Kwarteng will also reveal how the £2,500 two-year energy bills price cap will be paid for. Jon Hickman, of auditors BDO UK, said: “Truss’s proposed sweeping tax cuts will leave large holes in the public finances.”
The Chancellor could rake in easy money by raising tobacco duty in line with inflation plus 2% – lifting a £12.75 pack of cigarettes to an eye-watering £14.57.
There could be a hike in the minimum wage to £10.50 an hour. But TUC boss Frances O’Grady wants £15. She says: “Tax cuts will do nothing to jumpstart the economy. Those who profited from this crisis should pay a fair share – with a bigger windfall tax on oil and gas giants and new taxes on wealth.”
The Treasury is also looking at proposals to halve VAT to 10% to stimulate spending and help reach Mr Kwarteng’s target of 2.5% growth.
Pensioners will see a bumper uplift of at least 10% next year as the triple lock returns – lifting payments by the highest of inflation, earnings or 2.5%.
Retirement analyst Helen Morrissey, of Hargreaves Lansdown, predicts pensions topping £200 a week. She said: “They are in line for a record increase as long as the Government keeps its pledge on the triple lock.”
