According to reliable government sources, Chancellor Jeremy Hunt is currently mulling over further National Insurance reductions.
The announcement of tax policy scheduled for September is generating growing impatience about the tax adjustments that could be made.
Although the Chancellor has hinted at his desire to cut taxes in the next fiscal event, this is highly dependent on the current macroeconomic environment.
Senior Conservative Party officials have confirmed that the Treasury is preparing for a further update of economic and fiscal policy.
The timeframe for this update would depend on the date of the next general election, which Prime Minister Rishi Sunak predicts will be in the second half of 2024.
Further National Insurance Cuts Ahead
According to an official familiar with the matter, the Treasury is preparing a tax event in September. The primary aim is to reduce National Insurance contributions by an additional 2%.
Such a move would allow Chancellor Hunt and Prime Minister Sunak to boast a significant reduction in the main National Insurance contribution - from 12% to 6% - in three tax announcements since November last year.
Mr Sunak has previously stated his long-term goal of abolishing National Insurance contributions for employees altogether. He has claimed that the tax is a 'double burden' when combined with income tax.
However, implementing this additional 2p cut in the autumn would cost an estimated £9 billion. Whether this measure is feasible depends largely on the fiscal room for manoeuvre determined by the independent Office for Budget Responsibility.
Stabilising Public Finance Challenges
At a time when the government is continuing its efforts to stabilise public finances and reduce high levels of debt, recent investor forecasts for potential interest rate cuts by the Bank of England in 2024 have been revised.
Consequently, public borrowing costs in the UK are rising, which could limit Chancellor Hunt's room for manoeuvre on pre-election tax cuts.
Chancellor Hunt pointed out that prudent fiscal management could pave the way for tax cuts in the autumn. Meanwhile, the Conservative Party is looking to build on the National Insurance cuts of the last two budgets to ease the growing tax burden on the elderly.
But the IMF once again warned the UK government this week, listing it as a major economy in need of "urgent policy action" to balance spending and revenues.
Although the Fund acknowledged recent measures to raise revenue, it said it was concerned that further tax cuts could worsen the medium-term outlook for public debt.
A spokesman at the Treasury has declined making any details public, saying that "any tax events would be announced in the usual way".