Tory MPs call on Hunt and Sunak cut taxes for lowest incomes in March budget

Rishi Sunak should target tax cuts for people on lower incomes rather than slash inheritance tax in the Budget and general election campaign, Tory MPs have said.

The Prime Minister and Chancellor are under pressure to use the 6 March Budget to appeal to voters in Red Wall seats captured by the Conservatives in 2019.

There has been growing speculation that Jeremy Hunt will reduce inheritance tax in his set piece fiscal event.

But the measure would only benefit a relatively small number of people with the wealthiest estates.

A growing number of Tory MPs are calling for the PM and Chancellor to cut taxes for more people at the lower end of the income scale after several years of the cost of living crisis.

Former minister Neil O’Brien said: “In the Budget and election campaign, the Conservatives should prioritise paying people in social care more to end low wage immigration, hiring more GPs, tax cuts for those at the bottom end to help with cost of living, and tax cuts that boost productivity (widen capital allowances).”

And another Tory MP told i they suspected there would be “something on income tax or national insurance” in the Budget because the timing will allow any change to be implemented before the start of the next financial year, in April.

But the MP pushed back against calls to lower or scrap inheritance tax and said any pre-election sweetener should be aimed at low and middle-income families.

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“We could look at the personal allowance and the thresholds that have been frozen. When they were frozen we didn’t think inflation was going to be running at over 10 per cent across two years.

“That is the one I would fix rather than playing around with rates. I think there’s quite an easy way to give people a decent amount of money back there,” the backbencher said.

“I wouldn’t touch inheritance tax. I’m not sure how you would explain coming out of a cost of living crisis where everybody’s worse off that you’ve chosen to get a tax cut to the four per cent richest estates.”

However, some backbenchers called for Mr Sunak and Mr Hunt to cut inheritance tax to open up a clear dividing line with Labour in an election campaign.

Former Cabinet minister Sir Jacob Rees-Mogg told GB News: “Inheritance tax is a pernicious and bad tax, which ought to be scrapped.

“The reason inheritance tax is such a bad tax is because of its economic consequences. It leads to the misallocation of capital and that undermines economic progress and investment.

“You see the same with farmland, farm businesses and farmland within them is inheritance tax free, but if you own a house or property that’s built on something that was farmland, it’s not – so you distort the investment. And you also encourage people to hold on to investments that they’d otherwise be better off selling and reallocating the capital.

“It means that money is not used as productively as it ought to be. It’s not invested in those things that will drive the economy into the next century. So that’s why it’s a bad tax. It’s time to scrap inheritance tax in the spring Budget.”

Another former Tory Cabinet minister said the Prime Minister and Chancellor should “definitely” cut inheritance tax, as well as look at reducing the burden for those on lower incomes, adding: “As well as helping the Tory vote, it would require Starmer to say if he would reverse the cuts if he got into power.”

The leader of the TUC has meanwhile urged the Labour leader to pledge a wealth tax in the election campaign.

Sir Keir Starmer and shadow Chancellor Rachel Reeves have ruled out wealth taxes.

But Paul Nowak, general secretary of the TUC, told i: “We’re committed to thinking of ways to shift the tax burden from workers on to wealth. We’ve got a tax system that hasn’t kept pace with the changing income inequality in this country.

“I’m a trade unionist, if I took the answer the first time anyone said no I wouldn’t last long in the job. Of course it’s going to be part of the debate and the conversation if Labour win the next election.”