FAMILIES face forking out hundreds more in taxes under Jeremy Hunt’s new plan to tackle the “black hole” in the UK’s finances.
The Chancellor is set to reveal the government‘s exact plan to balance the books in less than three weeks time.
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And he is said to already be looking to extend the four-year freeze on income tax by two years, despite warnings it will see millions more Brits dragged into the 40% tax band.
This would see families forced to cough up hundreds of pounds more in tax.
In 2021, then-Chancellor Rishi Sunak froze tax bands until 2026.
At the time of its introduction, the freeze was expected to bring in around £6billion a year for the Treasury as it looked to cover the cost of coronavirus support.
The basic rate tax payers pay 20% on earnings over £12,570, while higher rate payers are charged 40% on earnings over £50,270.
By the 2025-26 tax year, an estimated 7.7 million people will be paying higher-rate tax – the highest number on record.
This is 1.6 million more than the current figure of 6.1 million, a Institute for Fiscal Studies (IFS) report said.
Experts from the IFS predicted earlier this month that families will lose more from “stealthy” freezes over the next three years.
It estimates the freeze on thresholds will take away £2 for every £1 given through cuts to personal tax.
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This means households will be £1,450 a year worse off, according to The Telegraph.
Meanwhile, the new PM is preparing to drastically cut public spending and hike taxes in the government’s upcoming budget.
Treasury officials say the country faces a daunting £50b black hole in public finances.
In order to close the gap and ultimately save the “bleak” economy, tough decisions will have to be made.
Chancellor Hunt will confirm the government’s plans on November 17.
It could involve less money being spent on vital services such as the NHS, policing, courts and schools.
Britain’s economy took a huge tumble in the aftermath of the Covid pandemic.
Combined with Mad Vlad Putin’s war in Ukraine, the global cost of energy and Liz Truss’ disastrous mini budget, the outlook is unsure.
A treasury source warned yesterday: “Markets have calmed somewhat, but the picture is still bleak.
“Britain is facing an economic crisis with a massive fiscal black hole to fill.
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“People should not underestimate the scale of this challenge, or how tough the decisions will have to be.
“We’ve seen what happens when governments ignore this reality.”
