In his Budget speech, Jeremy Hunt hinted at the possibility of a Conservative-led government eventually eliminating National Insurance.
The Chancellor expressed concerns about the current income taxation system, labelling it unjust. He pointed out that individuals earning through employment are subject to National Insurance contributions and income tax, whereas those with different income sources are taxed only once.
Highlighting this as an unfair double taxation on work, Hunt criticized the system’s complexity that, in his view, discourages rather than encourages work.
Hunt announced an immediate reduction of National Insurance by 2p starting April, which he anticipates will save the average employee about £450. However, he suggested a more ambitious long-term goal to create a more straightforward and equitable tax system.
Emphasizing the Conservative belief in the importance of rewarding work and addressing the inequity of double taxation on earnings, Hunt stated that further reductions in National Insurance would be pursued.
These reductions, he clarified, would be contingent on responsible fiscal conditions that don’t lead to increased borrowing and can be implemented without affecting the quality of public services.
UK to narrowly avoid record tax burden
Jeremy Hunt has narrowly avoided setting the UK on a course for its highest tax burden since 1948, according to projections from the Office for Budget Responsibility. The forecast for the 2028-29 tax burden is now 37.1%, slightly lower than the previously projected 37.7% and just below the historic peak of 37.2% in 1948.
This development follows the Chancellor’s recent Spring Budget announcements, which included a series of tax adjustments. Among these changes, Hunt announced a reduction in the higher rate of property capital gains tax from 28% to 24%, providing a financial reprieve for landlords. Additionally, he confirmed a 2p reduction in National Insurance for employed individuals, bringing it down from 10% to 8% starting April 6. For the self-employed, National Insurance will be reduced from 8% to 6%.
These adjustments are part of a broader strategy to reform the tax system, which also involves abolishing the existing tax framework for non-domiciled residents. These changes aim to establish a tax system that is both fairer and competitive, with the projected revenue from these reforms expected to be around £2.7 billion annually.
