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The chancellor has said that the current tax system for non-doms will be abolished, confirmed a 2p cut to national insurance and increased child benefit thresholds.
In the budget, Jeremy Hunt said “permanent cuts in taxation” were possible because of the progress made in bringing down inflation – with forecasts suggesting it will fall to the target level of 2% within months.
More parents will be paid child benefit after the £60,000 threshold, beyond which no payment is currently made, will be extended to £80,000 from next month.
At present if one parent earns £50,000 a year child benefit payments are reduced. Following Mr Hunt’s announcement such payments won’t be tapered off until a parent is paid £60,000 annually.
The policy change will help 170,000 families with children under 16, or under 20 if they are in full-time education or training, Mr Hunt said.
Scrapping the “non-doms” regime, which allowed certain wealthy individuals to avoid paying tax on their foreign income, is expected to raise £2.7bn a year.
Mr Hunt indicated plans to completely scrap national insurance contributions, branding it “double taxation”. National insurance brought in around £177bn in the 2022-23 period in tax.
And the tax burden is also set to continue to rise – albeit at a slightly reduced level when compared to last autumn’s forecast.
In total, the government will take £19.7bn more in tax by 2029 than forecasted in March 2021, even when the cuts to national insurance are included, due to fiscal drag.