Accountants urge Chancellor to increase tax thresholds.

TLDR

In a bid to reduce the tax burden, accountants are urging the Chancellor to raise tax thresholds instead of cutting national insurance. Frozen thresholds are causing millions of taxpayers to pay more in taxes, with many feeling the impact of inflation. Suggestions include increasing basic rate bands, personal allowances, and personal savings allowances to alleviate fiscal drag. The Chancellor faces a dilemma of balancing tax cuts with the country’s financial situation, as politically-driven measures may lead to further austerity. The freezing of thresholds extends beyond income tax, affecting VAT and inheritance tax as well.

Key Elements of the Article

Amid rumors of a 2% cut in national insurance, accountants argue that frozen tax thresholds are more damaging in the long run.

• A 2% cut in national insurance is seen as a cheaper option for the Chancellor than reducing income tax rates and thresholds.
• Freezing thresholds until 2028 is increasing the tax burden for taxpayers as inflation rises.
• Accountants suggest raising basic rate bands, personal allowances, and personal savings allowances to address fiscal drag.
• The freezing of thresholds extends to VAT and inheritance tax, impacting small businesses and taxpayers.

A balanced approach to tax cuts, considering the country’s financial situation, is crucial to avoid further austerity measures and ensure sustainable tax policies in the long term.