Chancellor Jeremy Hunt is unsure if the government can afford further tax cuts – as a National Insurance (NI) reduction comes into force today.
The pre-election cut to NI, from 12% to 10%, will impact around 27 million payroll employees across the UK.
A person earning the UK’s average salary of £35,000 will save £450 a year, or £37.38 a month, as a result of this change.
Money latest:See how much your pay will change
Mr Hunt said the reduction, announced in his Autumn Statement last year, means “that a typical family with two earners will be nearly a thousand pounds better off this year”.
But Labour argued this wasn’t true, saying frozen income tax and national insurance thresholds mean that many families have been drawn into higher tax bands.
The Opposition’s new attack ads criticising the policy even made it onto the Tory-supporting website Conservative Home on Friday.
More on Jeremy Hunt Related Topics: Jeremy HuntNational InsuranceTaxShadow chancellor Rachel Reeves said: “Under Rishi Sunak’s raw deal, for every extra £10 people are paying in tax they are only getting £2 back.”