Surprise £20bn war chest holds key to a pre-election splash of tax giveaways

JEREMY Hunt could deliver a preelection bonanza with cuts to income tax and inheritance tax after his slush fund doubled to £20billion.

- Sam Lister

The Chancellor's war chest was boosted by a surprise major fall in borrowing, good news for Tories clamouring help in the Budget to recover from poor poll ratings.

It means cutting inheritance tax could come back into the reckoning despite Prime Minister Rishi Sunak reportedly going off the idea as a crowd-pleaser.

Those changes could cost the Treasury up to £6billion, while a mooted 2p cut in income tax would come with a bill topping £13billion.

Ruth Gregory, deputy chief economist at Capital Economics, said better than expected public finance figures will give Mr Hunt a "bit more wiggle room for a big pre-election splash".

Borrowing was £11billion lower than the City expected at £7.8billion.

It was also £8.4billion less than a year earlier and the lowest December borrowing figure since 2019. Along with around £10billion in changes to the value of student loans, it means the Chancellor has about £20billion worth of "headroom".

Conservative MP Sir John Redwood said the figures showed "big savings coming up".

COMMENT 

ELLIOT KECK

Head of Campaigns, TaxPayers' Alliance RISHI Sunak has supposedly cooled on the idea of cuts to inheritance tax.

Because this particular tax only applies to 3.7% of estates, he's unconvinced that it's the best use of the precious fiscal headroom the Chancellor has available, reports have suggested.

But fresh figures reveal it is a far nastier and painful tax than its supporters claim.

Even if only a small number of estates are liable to pay it, for each one there will be children, husbands, wives, brothers, sisters and friends badly impacted. While grieving, they have to navigate a maze of rules and regulations just to work out what they owe the taxman.