Hunt expected to cut National Insurance by another 2p in Budget

Some Conservatives want a cut in income tax, rather than National Insurance. They argue it’s more likely to be noticed by voters – and therefore a better election strategy.

But a cut in the basic rate of income tax would be more expensive, because it affects more people – including those who make money from property, as well as some pensioners.

In contrast, National Insurance affects just those in work.

So, a cut in the basic rate of income tax from 20p to 19p would cost the Treasury around £7bn a year. A 1p cut in National Insurance would cost the Treasury around £4.7bn per year.

(The 2p cut that’s likely to be announced today will cost around £9bn a year).

And, as my coleague Dharshini just explained, an NI cut would only partially offset income tax thresholds being frozen until 2028-29.

That means that while you may get a pay rise, it could drag you into a higher tax bracket.