The Daily Telegraph
Truss promises tax break for those who quit work to be carers
Move is one of half a dozen major cuts that the new Prime Minister believes will kick-start the economy
PARENTS who step back from work to take care of elderly loved ones or children will get a new tax break under a change expected to be unveiled by Liz Truss before Christmas.
The move is just one of half a dozen major tax cuts that the Prime Minister is weighing up to kick-start the economy and avoid the recession that is forecast for the coming year.
Ms Truss and Kwasi Kwarteng, the Chancellor, are plotting two major fiscal interventions in three months as they make economic growth the foremost target for the Treasury.
One batch of tax cuts is expected to be announced this Friday as policymaking returns after a period of limited activity during the national period of mourning for Queen Elizabeth II.
At least three tax cuts will be confirmed then. One will be the reversal of the 1.25 per cent National Insurance contribution rise which came in this spring. A second is the scrapping of plans for Corporation Tax to jump from 19 per cent to 25 per cent next spring. The third is temporarily suspending green levies on energy bills, which was confirmed last week.
Beyond those measures, however, are a string of other tax cuts that are being considered which could have a significant direct impact on household finances. Some are being considered for Friday’s announcements but others are more likely to wait until Ms Truss’s first full Budget, expected in November.
One of those moves involves a tax cut for families. When Ms Truss launched her Tory leadership campaign in July she promised a review in this area.
Ms Truss said in her launch speech: “Families are a vital part of our lives and a crucial building block for a stable society. They don’t just look after themselves but they’re part of communities, charities and even businesses.
“We will review the taxation of families to ensure that people aren’t penalised for taking time out to care for children or elderly relatives.”
Later in the campaign, a specific policy change was pledged – allowing people to transfer their personal tax allowance within a household.
Each adult is currently allowed to earn £12,570 a year before paying any income tax. However if that person steps back from work to look after someone then the tax benefit is lost.
Under Ms Truss’s proposals, the tax allowance could be passed over to a partner in such circumstances, meaning an effective tax saving of up to £2,514 a year per couple.
Ms Truss’s decision to put the issue in her first campaign speech and later to spell out a specific policy means swift action is expected now she is in No 10.
A Government source last night indicated that the change is more likely to be announced in the Budget later this year than in Friday’s fiscal statement.
A fifth major tax cut being considered is bringing forward the 1p cut to the basic rate of income tax, which was scheduled to come into effect by 2024.
There was no denial yesterday of press reports that speeding up the income tax cut was being considered for this Friday’s announcements, though no final decision has been taken.
In recent weeks, it was reported that another tax cut is being weighed up – reducing VAT. The move is only possible now the UK is out of the EU.
‘We will review the taxation of families to ensure they aren’t penalised for taking time out to care for elderly’
From tomorrow, with national mourning at an end, the harsh reality of the country’s difficulties will be apparent once more. We will see a rush of Government announcements intended to fulfil some of the promises made by Liz Truss during her campaign for the premiership.
Three crucial issues are to be addressed immediately. First will be details of the financial help businesses are to receive to deal with soaring energy prices. Many bosses complained that the initial announcement of a cap on domestic bills of £2,500 left them in the dark as to the assistance they would receive. This was partly the result of the shut-down of political activity during the period of mourning, and needs to be rectified now.
The second matter is the crisis in the NHS, with Thérèse Coffey, the new Health Secretary, set to prioritise what she has defined as the service’s ABCD – ambulances, backlogs, care, doctors and dentists. She is right to focus on ambulance response times, because lengthy delays in getting to an emergency are potentially fatal for victims of accidents, heart attacks or strokes, rendering any concerns about subsequent NHS care redundant.
Ms Coffey won plaudits at the Department for Work and Pensions for being decisive. But the issues in our health services are so deep-seated that a dose of reality must accompany her plans, with less of the sentiment normally attached to political utterances about the NHS.
On Friday, Kwasi Kwarteng, the new Chancellor, will unveil an emergency fiscal package, including cuts in National Insurance and corporation tax, and other measures. It is no exaggeration to say that the next few days will define Ms Truss’s premiership for the rest of this parliament.