Jeremy Hunt is set to announce cutting inheritance tax, lowering business levies and reforming the state pension triple lock in next week’s Autumn Statement, according to widespread media reports.
Speculation about the tax cut has been fuelled by forecasts that the chancellor will have more tax revenue to spend combined with falling borrowing costs and a lower than expected rise in state benefits.
The Guardian states Hunt was “expected to hold off from cutting taxes until next year”. However, with inflation falling faster than expected and “clamouring” from Tory MPs “for a pre-election giveaway”, the chancellor “is open to the idea of doing it sooner.”
Forecasts from the Office for Budget Responsibility were delivered to Hunt today (November 17). They will show the “headroom” the chancellor has for tax cuts while keeping his own fiscal rules.
The Times reports the chancellor could cut inheritance tax from 40% to either 30% or even 20% and promise to abolish it completely in the next manifesto.
The Independent reports tax cuts for small businesses could see changing the VAT threshold from £85,000 to £90,000. It is also anticipated Hunt will extend “full expensing” for businesses allowing them to offset investments against corporation tax payments.
While Britain’s wealthiest will benefit from the inheritance tax cut, the poorest are set to be hit with a lower than expected rise in benefits. It is expected the chancellor will only raise them by 4.6% – in line with October’s inflation figure – rather than the 6.7% for September.
That will save the Treasury around £2 billion per year. However, an estimated nine million households will be hit with the Guardian stating it will “cost single mothers an estimated £218 a year.”
Abolishing inheritance tax would cost the Treasury around £7 billion per year, according to the Institute for Fiscal Studies. That would rise to an estimated £15 billion each year by 2032. People inheriting estates worth £2.1 million or more would receive half of the benefit.
Cutting inheritance tax while holding the rise in benefits would prove popular on Tory backbenches and, the party hopes, help erode some of Labour’s 20 point lead in opinion polls.
Furthermore, the Telegraph reports that as well as slashing inheritance tax from 40%, reform of the state pension triple lock is also on the agenda, as too Isa reforms.
Hunt is expected to announce that state pensions will only rise in line with wage growth (at 7.8%) rather than total pay (at 8.5%) which includes one-off bonuses – a move that could save £900 million.
Isa reforms may see savers allowed to open multiple Isas of the same type without losing their £20,000 tax free allowance. Another new measure may be the creation of a Great British Isa offering savers a £5,000 tax free allowance for investing in UK companies.
It’s only a week since the Telegraph’s former associate editor Christopher Hope speculated that chancellor Hunt could be headed for BBC One’s Strictly Come Dancing if he were to have been sacked in Sunak’s reshuffle.
By way of explanation, Hope – now political editor of GB News – offers up Hunt’s reminiscing: “I used to be a Latin dancer with no great skill”.
Continuing, the chancellor – who kept his post in the PM’s shock reshuffle – told Moira Stewart on Classic FM: “But when I was elected as an MP – and still a young single man – I used to wear a T-shirt under my suit … We did the last vote at 10 o’clock in the evening. I would then hop into my car and drive to a Lambada club, take off my suit, like Superman, and get on the dance floor and shake those hips.
“Tango is the one dance I’ve never learnt. And that’s my ambition.”
