Rishi Sunak Announces His Radical Tax Vision

Rishi Sunak is today announcing his radical tax vision. Rishi will commit to cut the basic rate of Income Tax from 20p in the pound to 16p by the end of the next Parliament.

This represents a 20% tax cut — the largest cut to income tax in thirty years.

Rishi’s number one priority is to tackle inflation and he has the right plan to do that by getting borrowing under control and implementing supply side reform in order to improve productivity. Once we beat inflation Rishi has a clear tax vision that will prioritise putting money back in the pockets of hard working families to reward work.

If elected Prime Minister Rishi will:

  • Deliver his promise, made earlier this year, to take 1p off income tax in April 2024
  • Take a further 3p off income tax by the end of the next Parliament
  • Fund this from the additional tax receipts generated by forecast economic growth
  • Commit to not increasing the debt burden to fund these changes
  • Use the next Spending Review to drive greater efficiency and reform in order to deliver value for taxpayer money

This is part of a broader tax plan to:

  • Help with the cost of living with an additional VAT cut (2022)
  • Implement radical business tax reform to improve productivity and investment (2023)
  • Cut income tax to let people keep more of their own money (2024)

Rishi’s 1p cut to income tax announced at the Spring Statement is fully costed and paid for and will be introduced in 2024.

Each subsequent 1p off income tax will be paid for through the economic growth that is forecast by the OBR. Debt will also continue to fall under Rishi’s plan.

Rishi’s income tax vision sits alongside his plan to reform corporate taxation. Business investment is running nearly 10 per cent below its pre-pandemic level, and as Rishi set out in his Mais Lecture earlier this year, business investment in the UK lags behind the OECD average.

Rishi’s plan to put this right by reforming capital allowances, a special form of tax reduction that is only available to those companies actually making investments, will encourage much needed investment and boost growth.

Rishi Sunak said:

“What I'm putting to people today is a vision to deliver the biggest income tax cut since Margaret Thatcher’s government. It is a radical vision but it is also a realistic one and there are some core principles that I'm simply not prepared to compromise on, whatever the prize.

“Firstly I will never get taxes down in a way that just puts inflation up. Secondly I will never make promises I can't pay for. And thirdly I will always be honest about the challenges we face. Because winning this leadership contest without levelling with people about what lies ahead would not only be dishonest - it would be an act of self-sabotage that condemns our party to defeat at the next General Election and consigns us to a long period in opposition.

“There is no more serious choice than the one now facing Conservative members: to decide the person who leads our country at home and abroad during difficult times. As they turn to that decision I would urge them to treat with caution any vision that doesn't involve any difficult trade offs and remember that if something sounds good to be true - then it probably is.”