Rupert Lowe's Restore Britain income tax plans set to cost £100billion

Restore Britain's plans to slash income tax could leave a £100billion hole in the nation's finances, economists have warned.

The party's leader, Rupert Lowe, unveiled the sweeping tax reduction package on Tuesday after a strong showing against both the Liberal Democrats and Conservatives at the Makerfield by-election.

The pledge aims to reverse years of stealth taxation pursued by successive Labour and Conservative governments.

However, fiscal experts have cautioned the sums do not add up, with HM Revenue and Custom's (HMRC) own estimates suggesting the true cost could be roughly double what Restore Britain claims.

The party, which is currently in discussions with Reform UK over a potential electoral pact, has put the annual cost of the package at around £50billion.

Under the proposals, the tax-free personal allowance would rise from its current level of £12,570 to £16,000, the figure it would have reached had the threshold kept pace with inflation since being frozen in 2021.

Rachel Reeves, the former chancellor, extended that initial six-year freeze well into the next decade.

Restore Britain would also significantly widen the basic rate band by lifting the threshold at which the 20p rate applies from just over £50,000 to £100,000.

The party has also pledged to abolish the tapering of the personal allowance for those earning six-figure salaries, a mechanism that currently subjects these workers to effective tax rates exceeding 60 per cent.

HMRC's ready reckoners suggest the personal allowance increase alone could cost around £34billion, while raising the basic rate threshold could cost around £80billion, although economists note these estimates can be unreliable.

Mr Lowe has said the tax reductions would be funded by scrapping the state pension triple lock, replacing it with a straightforward inflation link, alongside substantial cuts to welfare and public spending, including freezing benefits in cash terms and limiting payments to British citizens.

The Restore Britain leader said he was "comfortable" with the party's costings, acknowledging that estimating the impact across such a broad tax band was "to some extent an art, not a science".

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He also defended plans to scrap the triple lock, describing the move as a matter of fairness between generations.

Mr Lowe said: "It is effectively irresponsible. I think the majority of the wealth is locked up now in the older generations, and as we see it at Restore Britain, it's the younger generations who need to see the benefit of some form of wealth transfer."

He added that no taxes would be cut until spending had been brought under control.

Julian Jessop, a fellow at the Institute of Economic Affairs, said: "Any proposal to slash the tax burden is always welcome, but such a broad-based package is hard to justify and could open up another gaping hole in the public finances."

He added that it would be preferable to target particularly harmful levies such as stamp duty and payroll taxes.

The wider fiscal backdrop has added to concerns over the growing tax burden.

Analysis by the Institute for Fiscal Studies indicates the proportion of people liable for income tax is projected to rise from around 60 per cent at the start of the decade to more than 75 per cent by 2030, while the Office for Budget Responsibility has warned fiscal drag is approaching its limits.

Mr Lowe remained confident about the proposals.

He said: "If we release the British people from the manacles of the state, we expect the economy to pick up very quickly."

Mr Lowe added that he believed "rainmakers and wealth creators" who had left Britain would return under the proposed tax regime.