Tax Cuts Possible During 2022?

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May 23rd 2022
Tax Week 7
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Tax Cuts Possible During 2022?

BOE warns cost of living pressure could continue for up to two years as Chancellor Sunak faces calls to intervene.

The Bank of England has warned the UK is heading for recession while the cost of living crisis may continue exerting pressure until 2024.

Interest rates are already on the way up, the base rate being raised to one percent his month - and expected to hit around 2.5 percent next year while inflation runs away to 10 percent.

The interest rate rises in particular will be a shock to many who have had historically low mortgage rates for over a decade. Those on variables, trackers, discounts will see their monthly mortgage payment increase. Buy to let landlords may pass this on to tenants too.

Sunak raised the threshold for NICs in the 2022 Spring Statement to help counter the 1.25 percent health and social care levy. This was alongside a small fuel duty cut and a promise to lower the basic rate of income tax to 19 percent in two years time.

The more immediate pressures households are facing involve soaring energy costs, which are expected to jump once again in late summer.

The Chancellor is therefore facing calls to intervene now with more immediate action and policies to help struggling households across the country.

There are arguments within government on implementing a 'windfall tax' on the energy companies, who are currently boasting of record profits while bills soar, to afford tax cuts for the masses.

Reports state that ministers are looking to announce new measures to help with the cost of living crisis before the end of July.

It is not known whether this will be direct help with energy bills (like the £150 council tax rebate) or actual tax cuts - possibly bringing forward the one pence basic rate cut, which would have previously been implemented around general election time.

Other options include reversing the national insurance 'health and social care' levy and cuts to fuel VAT.

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