The Chancellor promised the CBIU that a Labour government would ‘continue to look with you at the business tax regime so that we persuade people that it is in Britain’s interests to make, and keep, the UK as the most competitive place for the international business.’
And he promised: ‘We are ready to work with you to build on our successful research and development tax credit to create the best incentives and make Britain the best place for R&D.’
But the Conservative Party unveiled proposals for helping millions of lower-income people who have been dragged into paying tax, and those on middle incomes trapped by top-rate tax.
These options for change were contained in a tax consultation paper, as Tory Mr Letwin considered options for his Shadow Budget.
They include raising the threshhold for the higher 40p-in-the-pound income tax rate from £36,145 to £40,800, which will take more than one million people (including many police officers, teachers and medics) out of the band and reduce their levy to 22p.
Personal allowances could also go up from £4,745 to £5,058, releasing 4.2 million lower-earners from tax. In future, allowances would be striclty linked to earnings instead of prices, after restoring the cuts pushed through by Labour.
But Mr Letwin admitted the proposals were only for consultation, and would not necessarily be included in his Shadow Budget next year or his first proper Budget if the Tories win the next General Election.
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