Tories plan £460 cut to national insurance

Conservative pledge to raise National Insurance threshold discussed as manifesto centrepiece

THE Conservatives are preparing to offer millions of workers a tax cut worth up to £460.

Ministers are drawing up plans to raise the threshold at which employees begin paying National Insurance, in a move previously described by economists as the most effective tax cut for lower earners. The pledge is being discussed as a possible centrepiece of a manifesto designed to win over blue collar voters, particularly in the Midlands and the North, who may be considering voting for the Conservatives for the first time.

The disclosure comes after Andrea Leadsom, the Business Secretary, signalled in an interview with The Daily Telegraph that the Tories were preparing to launch a manifesto that would commit the party to tax cuts. “A Conservative government will always be a tax-cutting government,” she said.

Mr Johnson signalled his interest in reducing national insurance payments during the leadership contest after his rival Dominic Raab, now the Foreign Secretary, said that he would raise the threshold at which workers start paying the tax, from £8,632 per year to £12,500, matching the starting point for income tax. Such a move would save the average worker £460.

National insurance contributions are taken from workers’ salaries and used to fund the NHS, benefits and the state pension. Some 600,000 workers would be freed from making any national insurance payments for each £1,000 by which the current threshold is raised, according to the Institute for Fiscal Studies (IFS).

On June 30, Mr Johnson said: “I think we should be looking at lifting people on low incomes out of tax [and] lifting the thresholds for national insurance. That’s where my priority is.”

Ministers have yet to decide on the level of the increase, and sources insisted that no final decision had been taken on whether the pledge would be included in the manifesto, which is due to be released this month.

But in June, the IFS said: “Increasing the point at which people start to pay national insurance is probably the best thing one can do through the tax system to help low earners.”

The IFS claimed that the policy would cost at least £3billion a year for each £1,000 increase from the current threshold of £8,632.

Mrs Leadsom also said that the Conservative manifesto would set out “our ambition for income taxes”.

Today, in an interview with The Sun

‘I think we should be looking at lifting people on low incomes out of tax.’

day Telegraph, James Cleverly, the Conservative Party chairman, says: “We talk about tax cuts [but] a better way to think of it is the money that people have in their pockets to spend on the things that they want to. So cutting their taxation is a way of doing that and as Conservatives we always look at ways of lifting the financial burden.”

Meanwhile, ministers are expected to confirm that around 2.5million people on working-age benefits will see their payments rise by 1.7 per cent, in line with inflation, for the first time since 2015. Thérèse Coffey, the Work and Pensions Secretary, said: “We’re clear the best way for people to improve their lives is through work but some people require [extra] support.”