Chancellor Jeremy Hunt will today end weeks of rampant speculation as he gets to his feet in the House of Commons to unveil the Autumn Statement.
He’s been under significant pressure from the Tory right to cut taxes ahead of next year’s general election – but has also had to walk a tricky tightrope to avoid spooking markets.
While there may yet be rabbits set to emerge from the Treasury hat, there have been a series of clues as to what the speech will contain.
City A.M. has broken down our top five things to watch out for in the Autumn Statement.
1. Full expensing
Business lobby groups have been urging Hunt to make full expensing a permanent scheme, with the Confederation of British Industry (CBI) describing it as the “single most transformational impact on business investment and growth”.
And he could be about to make all their Christmases come at once. The Financial Times reports this morning the Chancellor will offer a lasting tax break in the Autumn Statement to firms worth £9bn in the form of permanently extending the capital allowance, which was set to expire in 2026.
Businesses will be able to deduct all their spending on machinery, plant and IT equipment from their taxable profits, in perpetuity. An official told the paper it marked the “biggest business tax cut in modern British history”.
2. National Insurance
Another tax cutting measure widely expected to be on the cards – this time for personal taxation – will see Hunt slash National Insurance contributions for 28bn workers and the self-employed.
A one percentage point cut to contributions is thought to cost the Treasury about £5bn, and will hand back around £380 a year to those earning above £50,000, according to the Times.
It comes after Prime Minister Rishi Sunak confirmed earlier this week that he and Hunt would look to cut taxes – from their highest level since the Second World War – now that their target of halving inflation to 4.6 per cent has been achieved.
3. OBR to downgrade growth
In March the Office for Budget Responsibility (OBR) forecast that the UK would grow 1.8 per cent next year and 2.5 per cent in 2025. That now looks extremely optimistic.
The most recent forecasts from the Bank of England suggest that growth will be more or less flat over the next two years while most forecasters are also pencilling in low growth.
Expect meaningful downgrades from the OBR, which will impact predicted tax receipts.
4. Back to work and benefits cuts
Getting people back into work has been a key priority for this government. Already the Chancellor has announced extra support for those suffering with mental health conditions while threatening to take away benefits if people reject jobs.
Reports suggest Hunt will go further in today’s Autumn Statement. Those with mobility and mental health issues will face a cut to their benefits worth nearly £4,680 unless they look for work to do from home, according to the Times.
Not only will this push more people back into work, it will free up some space for the tax cuts for businesses that Hunt hopes will drive the economy forward.
5. Pouring one out
Look, if you need a drink after all that, we certainly aren’t judging. Pubs and bars have been clamouring for a cut to alcohol duty, warning the financial pressures they face are “crippling”.
And – in a win for the Sun’s campaign – it’s reported Hunt has heard their call and is expected to put a lid on the tax measure in time for the festive season.
It’s also thought drinking venues could be set to see their 75 per cent business rates holiday extended.
Additional reporting by Chris Dorrell