Tax cut for families

The Prime Minister has said she wants to cut taxes. These measures help working families struggling to meet the cost of living and energy crises. They would therefore be a far more cost effective means of providing support than a 1p reduction in the basic rate.

The letter is below:

The Rt Hon Kwasi Kwarteng MP

H M Treasury

1 Horse Guards Road 
Westminster 
SW1A 2HQ


Dear Chancellor,

One of the greatest challenges facing the Government is the impact on families of the cost of living and energy crises.

The Prime Minister has made it clear that she wants to cut taxes.

In the course of the leadership campaign she spoke of the need to enable parents to stay at home to look after their children and those needing care.

These aims could be tackled together by enabling parents, whether married or cohabiting, to transfer their personal tax allowance to their partner. Depending on the money available, this tax cut could be limited to people with children or caring responsibilities. For lone parents something similar to the Additional Personal Allowance which was given in the 1990s might be appropriate.

These measures would be focussed on families struggling to meet the cost of living and energy crises. They would therefore be a far more cost effective means of providing support than a 1p reduction in the basic rate, since most of the £6bn cost of that would go to those in less need of help.

Income tax liabilities are not related to how well off people are. One result is that families in poverty are paying income tax. Their take home pay then has to be supplemented by universal credit or the legacy benefits. This is not the case in most other developed countries. A tax cut allowing the transfer of allowances would also go some way towards meeting that issue.

These measures could be taken immediately, but in the medium term there should also be a more substantial move to take the family into account in taxation.

Yours sincerely,

D G Draper

Tax and the Family