A new report calls for sweeping changes to the United Kingdom’s tax system, including the elimination of national insurance, stamp duty, inheritance tax, and the 45‑pound‑per‑hour top income tax rate, in an effort to restore stalled economic growth.
The proposal targets national insurance as a major drag on small businesses, arguing that its removal would immediately cut the £28 billion rise in employers’ NIC bills that has been linked to hiring freezes and redundancies across the high street.
It also recommends scrapping stamp duty and inheritance tax, measures that could ease the succession pressures on family firms and encourage investment rather than restructuring.
Funding the tax cuts would require a reduction of the state to 33 percent of gross domestic product, down from the 42.7 percent forecast for 2030‑31, a scale of retrenchment that has no modern precedent.
The plan is staged to avoid market shocks. The first phase would eliminate tax distortions such as cliff edges that push marginal rates over 100 percent, which can discourage employees from accepting pay increases.
In the second phase, the 45‑pound‑per‑hour rate and inheritance tax would be removed while spending is trimmed to 41 percent of GDP, ensuring that planned defence expenditures remain protected.
The final phase would see national insurance abolished once the government’s size has been fully reduced to 33 percent of GDP.
The proposal acknowledges the lessons of a recent mini‑budget that led to a gilt market crisis, arguing that matching spending cuts with tax reductions could prevent a repeat of the crisis.
The report notes that the current tax burden sits at a 70‑year high and that structural inefficiencies disproportionately harm economic performance, suggesting that correcting these would benefit the economy.
The incoming prime minister has indicated only modest tax adjustments, focusing on rebalancing business rates for online warehouses and pledging fiscal discipline, which may limit the implementation of the full programme.
Ultimately, the report places the responsibility for the state’s size and its financing squarely on the new prime minister’s agenda.
