But now a question is being raised over whether the Chancellor will choose a pensions tax raid on the UK’s elderly to pay for the pandemic. Earlier this year Mr Sunak announced a five-year personal tax raid that will bring in more than £21 billion.
He froze thresholds for income tax, inheritance tax, capital gains tax and the pensions lifetime allowance, in order to bolster funds for the Treasury.
He also said corporation tax would jump from 19 percent to 25 percent in April 2023, although most smaller businesses will be spared the rise.
This means Britain now has a tax burden higher than at any time since the 1960s, according to the Office for Budget Responsibility (OBR).
But a Treasury source close to the Chancellor has played down the chance of an imminent change in Covid tax policy.
The source stressed it has not been a priority for Mr Sunak in recent weeks, according to the Telegraph.
As well as this, Government borrowing is coming down sharply following the reopening of society after that winter lockdown.
May’s deficit came in at £24.3bn, down from £29.1bn in April and £43.8bn in May 2020 when the economy was in the throws of the first lockdown.
The Government has borrowed £14 billion less than was originally estimated so far in 2021.
In March, the Office for Budget Responsibility had predicted borrowing across April and May would total £67.5 billion.
Instead, it is £14 billion lower, at £53.4 billion, easing some of the pressure on Mr Sunak to turn the UK’s finances around.
The senior government source said: “You can’t increase income tax, you can’t increase national insurance rate.
“I don’t think the Chancellor wants to increase capital gains tax.
“Pensions tax reform would work politically because the short-term impact on an annual basis would be virtually imperceptible for most people.”
Read More: Pensions tax raid: Will Rishi Sunak make pensioners pay for Covid-19? | Personal