Rishi Sunak is set to slash inheritance tax and secure the triple lock that guarantees state pension payments ahead of the next election, fuelling speculation he could go to the country as soon as May.
The Prime Minister could make an announcement on IHT before the Conservative Party Conference next week, vowing to reduce the death tax when it is possible and eventually scrap it.
Savers could also enjoy tax cuts worth tens of thousands of pounds under plans being discussed to raise caps on ISAs by £10,000 to £30,000.
Inheritance tax changes
The Sunday Times reported yesterday that Mr Sunak is drawing up plans to slash inheritance tax, which his officials have called “the most hated tax in Britain”.
Cutting the levy before eventually abolishing it entirely is one of a raft of crowd-pleasing announcements being considered before next month’s Conservative Party conference.
Inheritance tax is charged at 40% for estates worth more than £325,000, with an extra £175,000 allowance towards a main residence if it is passed to children or grandchildren. A married couple can share their allowance, meaning parents can pass on £1million to their children without any tax being paid.
One proposal being considered is for Mr Sunak to announce his intention to phase out the levy by reducing the 40% inheritance tax rate in the budget in March, while setting out a pathway to abolish it completely in future years.
Triple lock
Meanwhile, Treasury officials had been discussing taking a one-off break from the triple lock – which increases pensions each April by whatever is highest out of average earnings rises, inflation or 2.5% - due to inflation running at almost 7%.
There had been debate about ditching the guarantee in the next manifesto. But The Mail on Sunday reported that voters' reaction to the idea of axing the policy has been so negative that Tory strategists have ruled out any changes.
It comes as the Sun reports that local authorities are being told to 'be election ready' for the Spring, suggesting a general election could be held at the same time as local elections at the start of May.
No10 today declined to comment on 'speculation'.
ISA overhaul
And savers could soon enjoy tax cuts worth tens of thousands of pounds under plans to raise caps on ISAs
Increasing the existing allowance by £10,000 to £30,000 could mean capital gains savings of £35,490 over 20 years for a higher rate taxpayer investing in stocks and shares.
A £5,000 rise would mean paying £17,970 less, according to figures compiled by Hargreaves Lansdown.
The Telegraph says the government is considering overhauling the ISA system as part of an effort to encourage more investment in Britain, possibly by introducing an additional allowance beyond the existing £20,000 cap for those backing UK equities.
Savers do not pay tax on savings interest or capital gains accrued in ISAs.