Hammond’s tax bombshell to find £20bn a year for NHS

A FLAGSHIP Tory pledge to cut income tax for millions of working people could be ditched to help pay for the NHS.

Chancellor Philip Hammond is poised to postpone or even scrap the manifesto promise to raise the starting threshold for the basic and 40p rates of income tax in this month’s Budget.

A senior Tory source said the pledge was ‘up for grabs’ following Theresa May’s decision to announce a £20billion-a-year funding boost for the NHS.

Freezing income tax thresholds could raise £2billion a year.

‘Everything is on the table now,’ the source said. ‘If you are looking for guidance on tax policy I would not look to the manifesto. We will always be a party of low tax. But the Prime Minister’s priorities have changed. We have made a huge spending commitment here, which will be transformational for the NHS. But it has to be paid for and the Budget will reflect that.’

Mr Hammond is also considering reviving a VAT change for small business, which could raise £2billion.

But Treasury sources played down speculation that he will go ahead with a raid on the pensions of the better-off.

The proposal to ditch the income tax pledge was discussed by senior ministers yesterday but has not yet been signed off by the Prime Minister.

A Whitehall source denied that No10 was ‘at war’ with the Treasury over the issue. But the source confirmed that Mrs May is under pressure from her Chancellor to move on the issue after acknowledging that her NHS plan would require tax rises.

In 2015, the Conservatives pledged to raise the personal allowance for income tax to £12,500 by 2020, with the threshold for paying higher rate tax rising to £50,000 by the same date.

Last year’s Tory manifesto re-committed the party to the pledge.

Conservative MP Neil O’Brien said he would be ‘surprised’ if Mr Hammond went ahead with the move – and urged him to focus on measures that would not hit working families, such as trimming Britain’s £14billion foreign aid budget.