# UK tax reform and economic policy proposals

> Live situation record from CLSTR: https://clstr.news/situations/uk-tax-reform-and-economic-policy-proposals
> Updated: 2026-10-20T03:13:08.000Z. Sources: 4. Developments: 2.

Various political and economic actors in the United Kingdom have introduced distinct proposals for tax reform and fiscal restructuring.

Liberal Democrat leader Ed Davey proposed increasing the tax-free personal allowance to £15,000 within five years and raising the higher rate tax threshold to £56,000. Davey suggested these measures, which aim to remove two million people from the tax system, could be funded through a ‘bold new partnership with Europe’. Additionally, Davey advocated for social care reforms focused on the empowerment of disabled people.

Separately, the Institute of Economic Affairs (IEA) released an ‘Alternative Budget’ proposing £75 billion in tax cuts. This plan includes reducing income tax and employee National Insurance, abolishing stamp duty and inheritance tax, and broadening the VAT base. To fund military commitments, the IEA suggested the introduction of ‘Defence Bonds’ to allow savers to invest directly in national defence.

## Timeline

### 2026-10-20: Institute of Economic Affairs unveils £75 billion tax-cutting plan

The Institute of Economic Affairs has unveiled a £75 billion tax-cutting plan that could save median earners £1,300 annually through income tax, National Insurance, and the abolition of stamp duty.

2 sources. https://clstr.news/cluster/institute-of-economic-affairs-unveils-75-billion-tax-cutting-plan

### 2026-09-24: Ed Davey proposes tax cuts and social care reform

Liberal Democrat leader Ed Davey proposed raising the tax-free personal allowance to £15,000 and increasing the higher rate threshold to £56,000, while calling for a more empowering social care system.

2 sources. https://clstr.news/cluster/ed-davey-proposes-tax-cuts-and-social-care-reform

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Cite as: UK tax reform and economic policy proposals. CLSTR, https://clstr.news/situations/uk-tax-reform-and-economic-policy-proposals