Will Jeremy Hunt help out struggling workers with income tax and NICs cuts in the Autumn Statement? Will business taxes fall and will there be cuts to inheritance tax or stamp duty? We look at Chancellor’s options ahead of Wednesday

Jeremy Hunt and Rishi Sunak have begun talking up the likelihood of tax cuts as they seek to boost growth – both in the  economy and the Tories’ electoral fortunes.

Expectations are growing that the Chancellor could reduce some costs to workers in Wednesday’s autumn statement, with a general election expected within the next year.

But quite how big they will be and who will benefit is still a bit of an unknown factor. 

The pair were buoyed by the latest forecasts from the Office For Budget Responsibility (OBR) on Friday.

These showed that there is fiscal headroom of up to £30 billion, enough for a cut in the headline rates of income tax or national insurance. 

However experts have said that tax cuts will have to be accompanied by spending cuts to public services.

Speaking in north London today, Mr Sunak said he was able to move on to the ‘next phase’ of the Government’s economic plan after inflation fell to 4.6 per cent in October. 

But how heavily will taxes be cut this week? Though it has been halved, inflation still haunts the economy, with food prices especially having been hammered in the past year. Treasury officials believe cuts to personal taxation could cause inflation to spiral again and threaten the goal of driving it down to 2 per cent.

In his speech at a London college, the PM said: ‘And we can’t do everything all at once. It will take discipline and we need to prioritise. But over time, we can and we will cut taxes.’

It comes after an exclusive poll for the Daily Mail found that more voters now associate Labour with lower taxes than the Tories.

The poll, by Redfield & Wilton Strategies, found more than half (51 per cent) of voters believe now is the time for tax cuts, rather than waiting until Spring Budget next year. Just 28 per cent think taxes should remain the same, with only one in ten believing they should be hiked.

So what could Mr Hunt cut on Wednesday? 

Speaking in north London today, Mr Sunak said he was able to move on to the ‘next phase’ of the Government’s economic plan after inflation fell to 4.6 per cent in October.

Are we paying too much tax… new poll from The Daily Mail reveals the public’s verdict

Income Tax, ‘stealth tax’ and National Insurance Contributions 

Rishi Sunak vowed to start slashing the tax burden as he teed up the Autumn Statement in a speech today.

He said the ‘next phase’ was about to begin – with curbs on income tax and national insurance on the table as the Tories desperately try to claw back ground ahead of a general election next year. 

Treasury officials have been examining how feasible a 1p or 2p cut would be ahead of Wednesday’s Statement. 

Cutting income tax by 2p in the pound would cost £13-14 billion a year and save UK households around £450 annually on average.

In an exclusive poll for the Daily Mail at the weekend, most respondents (41 per cent) said they wanted reductions in income tax as they believe this is the most ‘unfairly applied’ levy. 

But the chancellor appears set to resist pressure to act. Speaking on Times Radio yesterday he said lower taxes are ‘not going to happen overnight’.

‘We want taxes to be lower, we will do so in a responsible way,’ he said.

‘I want to show people there’s a path to lower taxes. But we also want to be honest with people. This is not going to happen overnight. It requires enormous discipline year in, year out.

‘The difference between Conservatives and Labour is in 13 years under Labour, they put up taxes in every single budget. Conservatives cut taxes when we responsibly can.’

Rishi Sunak vowed to start slashing the tax burden as he teed up the Autumn Statement in a speech today .

He is also set to resist lauder pressure to reduce the so-called ‘stealth tax’ on income created by the impact of inflation on wages. 

‘Fiscal drag’ has been created because pay has on average gone up, but the tax band thresholds have not changed with them. 

It means that around 1.5million more people who previously paid the 20 per cent basic rate of income tax have been dragged into the higher and additional tax bands on earnings over £50,000 per year, taking payees from five million to 6.5 million.

And at the bottom end, the country’s poorest are also paying more tax as their pay rises above the personal allowance threshold of £12,570. 

In total, figures in the summer showed 2.5million more people have been dragged into paying income tax overall. The total tax take is nearly £40billion more compared with two years ago. 

Cutting income tax by 2p in the pound would cost £13.7 billion a year.

A cut to ‘Class 4 National Insurance Contributions (NICs)’ for the self-employed is being considered to help out plumbers, electricians and builders. 

Inheritance Tax

Mr Hunt has shelved plans to slash inheritance tax in the Autumn Statement.

The Chancellor had been considering whether to cut the 40 per cent rate of the hated duty – also known as ‘the death tax’ – in half.

But Government sources said the idea had been abandoned amid concerns it could be weaponised by Labour as a handout to the rich during a cost of living crisis.

There were fears that this in turn could lead to a backlash in the ‘red wall’ seats the Tories won in the 2019 election.

However, in a glimmer of hope that inheritance tax could yet be axed in the near future, it is understood that the proposal will be looked at again in the run-up to the 2024 Spring Budget.

The levy has been called the most hated tax in Britain despite only four per cent of people paying it.

Mr Hunt has shelved plans to slash inheritance tax in the Autumn Statement.

However, thanks to rising house prices and an increasing desire to transfer wealth between generations, more and more people are being dragged into paying it.

Leading economic forecasters at the Institute for Fiscal Studies say that up 12 per cent could be paying it within a decade.

The levy is charged at 40 per cent for estates worth more than £325,000, with an extra £175,000 allowance towards a main residence if it is passed to children or grandchildren.

Couples can combine their allowance, allowing transfers of up to £1 million tax-free.

Abolishing inheritance tax would cost about £7 billion a year.

In his Saturday column for the Daily Mail, former PM Boris Johnson became the most high-profile Tory to throw his weight behind slashing inheritance tax.

He said it was long ‘overdue’ because younger people don’t have it as easy as the so-called ‘baby boomer’ generation.

He wrote: ‘We baby boomers had the full-fat pensions; we had the free university; we had the cheap housing.

‘Those benefits allowed us to accumulate phenomenal wealth, as a generation, and in the name of intergenerational fairness it is right that more of that wealth should now be passed on to our descendants.

‘Yes, we should cut taxes on income, and effort, and enterprise. But it’s now right to cut inheritance tax as well.’

Business taxes

Jeremy Hunt has heightened expectations that he will cut taxes on businesses in a bid to boost growth with his autumn statement

Mr Hunt made clear that his “priority is backing British business” after promising an “autumn statement for growth”. 

One area being examined is cuts to help small businesses, including increasing the threshold at which they pay VAT from £85,000 to £90,000.

Rishi Sunak stressed today that the focus for cutting taxes is ‘very much the supply side’ of the economy, in an apparent hint that businesses could find some relief in Wednesday’s autumn statement.

Declining to comment on which taxes will be slashed, the Prime Minister told a Q&A session after his speech: ‘I’m not going to pre-empt the decisions that the Chancellor will make, other than to say that we will approach that task seriously and responsibly.

‘We can’t do everything at once, as I said. We will prioritise, we will be disciplined and our focus is very much the supply side and growing the economy.

‘We believe very much in an economy where the Government is doing less and allowing people to keep more of their own money.’

Stamp Duty

Mr Hunt is believed to have decided against cutting stamp duty to stimulate the housing market.

The point at which people start paying stamp duty is currently set at 5 per cent of the value of a property over £250,000, increasing to 10 per cent over £925,000.

However the Times reported there are concerns it could fuel inflation and it could instead be an option for the March Budget. 

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