Tax cuts and first-time buyer help, what Tories are considering to lure voters

The Government is apparently mulling a series of giveaways and tax cuts in the new year that are set to form part of the Conservative Party’s pre-election offerings.

The country is set to vote sometime in 2024, and the Tories will be hoping to cut their losses against Labour as they lag behind in the polls.

Many of the changes will likely be announced in the Spring Budget, due in March, while others could form part of the Conservative Party manifesto.

Help for first-time buyers

The Conservatives hope to woo first-time buyers ahead of the next election, with several options being considered to help people get on the property ladder.

One option reportedly under consideration is emulating schemes common in the US where the Government offers assurances against defaults on longer-term mortgages, usually 30 years, meaning buyers only need a smaller deposit, according to The Times.

Another option on the table is reviving the Help to Buy scheme in a slightly altered form after the original setup closed to new entrants in 2022.

The Government was said to be musing bringing back the scheme, first launched by then-chancellor George Osborne in 2013, which offered new buyers an equity loan of up to 40 per cent on their property and required only a five per cent deposit.

This is not the first time ministers have considered rebooting Help to Buy, after reports in May 2023 suggested the plans were being considered as a pre-election giveaway.

Stamp duty reform

The Times also reports that the Government is additionally considering reviewing stamp duty, and could potentially look at scrapping it altogether.

Chancellor Jeremy Hunt was said to be considering cuts to stamp duty ahead of his Autumn Statement last month, but no changes were announced.

It has been speculated that Mr Hunt could still bring in the changes in his Spring Budget early next year.

Cutting stamp duty could stimulate the housing market, which has slowed considerably in the wake of the pandemic, but will do little to bring down rents or help those with high mortgages amid higher interest rates.

Scrapping inheritance tax

Cuts to inheritance tax were also hinted at ahead of the Autumn Statement but were not announced by Mr Hunt, despite calls from many backbench MPs for the tax to be looked at.

The tax is currently charged at 40 per cent on an estate’s value above £325,000, or £500,000 if it is passed to a direct descendant.

It is paid by very few people, applying to just four per cent of deaths between 2020 and 2021.

Cuts to inheritance tax could still be included in the Spring Budget, and could form part of a new year giveaway to appease Tory MPs and woo voters.

The Telegraph reports that the cut is part of a range under consideration by the Government to be brought in at the Budget in March.

It could form a dividing line with Labour ahead of the next election, as the part is unlikely to match the commitment.

Cutting income tax

Other tax cuts being mulled by ministers as part of a pre-election package include cuts to income tax, according to The Telegraph.

Cuts to national insurance were announced in the Autumn Statement, with the main rate for workers lowered from 12 per cent to 10 per cent from 6 January.

There was also a cut for self-employer works, with class two national insurance being abolished from April and cuts to class four national insurance.

But further tax cuts could be on the horizon, with ministers reportedly considering reducing the rate at which people pay the 40 per cent rate, as well as cutting the basic 20 per cent rate.

Cutting taxes will likely form a key part of the Conservative’s election campaign, as the tax burden is currently at its highest level since the Second World War despite the recent cut to national insurance.