Rishi Sunak and Jeremy Hunt ‘at loggerheads over tax cuts in Budget’: Claims Chancellor is resisting PM’s demands to slash income tax as he targets ‘cheaper’ national insurance curb – and scrambles for ways of raising revenue

Rishi Sunak and Jeremy Hunt are said to be at loggerheads over tax cuts in the looming Budget. 

Fresh claims about Tory infighting suggest the PM has been pushing the Chancellor to curb income tax in the fiscal package on Wednesday – potentially the last before a general election.

But the Treasury has been voicing alarm at the parlous state of the public finances, with Mr Hunt instead believed to favour a cheaper option of trimming employees’ national insurance contributions.

He is also seemingly scrambling for ways of raising more revenue to help cover the costs, with a raid on non-doms on the table. 

But a government source dismissed the claim of tensions made by former chancellor George Osborne as ‘b*****s’.  

‘Osborne is so far out of the loop he’s floating in the North Atlantic,’ the source said. 

Rishi Sunak and Jeremy Hunt are said to be at loggerheads over tax cuts in the looming Budget

Tories have been demanding action on tax to revive the party's election chances

Tories have been demanding action on tax to revive the party’s election chances

On his podcast with Ed Balls, Mr Osborne said there is ‘friction’ at the top of government over whether to cut income tax or national insurance.

Mr Osborne highlighted that Mr Sunak previous laid out an ambition to bring the basic rate of income tax down to 16p.

‘There’s been friction between No10 and No11 – and it’s obvious No10 would like to cut income tax now,’ he said. 

‘That, specifically, is something that Rishi Sunak promised when he was running to be the Tory leader.’

Tories voiced concern yesterday after it emerged Mr Hunt has been considering a crackdown on non-doms to raise as much as £3.6billion a year.

It would have the benefit of creating a huge problem for Labour, with the Opposition’s own spending plans relying heavily on a commitment to axe or reduce the tax break.

Non-dom status allows people living in the UK but with permanent homes abroad to earn money from capital overseas without paying tax on it for up to 15 years. 

The move would represent a major shift, as Mr Hunt himself previously said the rules ensured rich people ‘spent their money here’ and played down how much revenue it would bring in.  

Mr Sunak’s wife Akshata Murty previously benefited from the system.

A government insider cast doubt on whether the proposal would go ahead, telling MailOnline it was ‘one option on a long list’ of potential revenue raisers. 

They suggested it might not be ‘necessary’ after the OBR watchdog provides more forecasts on the state of the public finances, adding that Mr Hunt ‘won’t do anything that risks the City’s competitiveness’. 

There have been suggestions that the idea might have originated in No10 rather than No11. 

Tory former Cabinet minister Sir John Redwood insisted there was already scope for tax cuts, despite warnings from the Treasury that the public finances are too tight for big reductions in the burden.

‘I agree with the Chancellor who said he wanted the rich to stay here and to spend their money here. It is easy to do popular things that make the country worse off,’ he posted on the X social media site. 

Victoria Price, managing director at Alvarez & Marsal and leader of the Private Capital Team, warned the Chancellor would be taking a significant risk: ‘While the decision could potentially yield an additional £3.5billion, such a meagre sum has a minimal impact on the UK’s broader financial picture.’

She warned the decision may prompt ‘ultra-high net worth individuals, who have the flexibility to live and work anywhere in the world, to re-evaluate the attractiveness of the UK as a place of residence and business’.

‘Mr Hunt’s decision to exceed Labour’s proposal, which aims to reduce benefits for short-term visitors to the UK and could generate an extra £2billion, could be perceived as extreme and hasty.’

Labour had pledged to scrap the non-dom status, but it is now looking at a compromise enabling individuals to live non-dom in Britain for up to four years, before paying full tax.

Mr Hunt spoke out against Labour’s plans at the end of 2022, saying it would be the ‘wrong thing’ to do. 

Economists have highlighted the mounting tax pain being suffered by Brits

Economists have highlighted the mounting tax pain being suffered by Brits 

He said at the time: ‘These are foreigners who could live easily in Ireland, France, Portugal or Spain. They all have these schemes. All things being equal, I would rather they stayed here and spent their money here.’

But it would kill off a Labour line of attack on Mr Sunak, whose wife, Akshata Murty, previously benefited from the rules.

The Prime Minister and Chancellor met yesterday and have more meetings planned to finalise the Budget. 

They will also receive the final set of fiscal headroom figures from the Office for Budget Responsibility.

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