UK's Hunt to propose 'stealth' income tax rise to fill 40 billion pound fiscal hole-FT

© Reuters. British Chancellor of the Exchequer Jeremy Hunt walks outside Downing Street in London, Britain October 20, 2022. REUTERS/Henry Nicholls

(Refiles to add reporting credits)

(Reuters) – UK Chancellor Jeremy Hunt is set to propose a stealth rise in income tax after the next elections to fill a fiscal hole of 40 billion pounds ($45.21 billion), the Financial Times reported on Friday, citing two government sources briefed on his plan.

Hunt will extend the current freeze on income tax thresholds and allowances into the next UK parliament, raising around five billion pounds per year by 2027-28, the FT report said, citing government sources.

The chancellor is also expected to put off capital projects and squeeze public spending after the next election, which must be held by January 2025, the FT added, citing people briefed on his plans.

Contacted by Reuters, the UK Treasury said it does “not comment on speculation around tax changes outside of fiscal events.”

Hunt reiterated on Friday that the government will do “whatever is necessary to get drive down debt in the medium term.”

He has been racing to find tens of billions of pounds of savings to try to reassure investors since former Prime Minister Liz Truss’ economic programme shattered Britain’s reputation for financial stability and left many people poorer.

($1 = 0.8848 pounds)

(This story has been refiled to add reporting credits)