National Insurance tax cuts to be wiped out by £880 of stealth tax hikes

Embargoed until 22.30 Monday 4 March 2024

• The average household in England will see an £880 hit in 2024-25 due to frozen income tax thresholds

• The figure is double the value of the £440 saving per household from the National Insurance cut

• Families in South East to face £920 hit from stealth taxes by 2026/27, highest in the country

• Liberal Democrats say the figures rubbish the Chancellor’s tax-cutting claims

Stealth tax hikes will cost the average household in England twice as much as what they’ll get from this year’s national insurance cut, new research commissioned by the Liberal Democrats has revealed.

The House of Commons Library analysis shows that the average household disposable income is set for an £880 hit in the 2024/25 financial year as a result of the Conservative Government’s freeze on income tax thresholds.  This is double the value of the £440 set to be saved by households due to the National Insurance cut over the same period. 

It means that despite changes to National Insurance, the average household in England will lose out on £440 over the coming financial year. Regionally, the South East is set to be worst affected, with an average hit of £560 per household in 2024/25, followed by London where households will experience a £510 drop. 

By 2026/27, stealth taxes will leave the average household in England £750 poorer after taking into account the National Insurance cut. Typical households in the South East will face a £920 hit by 2026/27, considerably higher than the £570 hit faced by those in the North East.

The Liberal Democrats said the research is yet more evidence that the Chancellor is hammering families in the “squeezed middle” with tax rises despite his tax-cutting claims. The party, which is looking to pick up seats across the so-called ‘Blue Wall’ including Jeremy Hunt’s own Surrey seat, has demanded the Chancellor ‘come clean’ with the British public ahead of the Budget on the impact of his stealth taxes.

Liberal Democrat Treasury Spokesperson, Sarah Olney MP said: 

“These figures show the reality of Jeremy Hunt’s unfair tax hikes which are set to clobber families for years to come. When people hear him talk about cutting taxes they know it’s an outrageous attempt to deceive the British public.

“Under this Conservative government families are facing soaring mortgage payments, sky-rocketing energy bills and now this endless stealth tax squeeze. 

“Across the Blue Wall, lifelong Conservative voters are sick and tired of this Chancellor’s hot air and are getting ready to kick this government out at the next election.”

ENDS 

Notes to Editor

Research from the House of Commons Library here.