Jeremy Hunt will deliver the Autumn Statement today as he sets out tax and spending plans before next year's likely general election.
The Tory Chancellor will unveil the Government's plans which will impact your pay, benefits, and pensions, just after 12.30pm. Rishi Sunak has already insisted he wants to cut taxes despite breaking a key Tory manifesto pledge not to hike National Insurance just 18 months ago. The Prime Minister declared in a speech this week: "I want to cut taxes, I believe in cutting taxes."
In a desperate bid to paper over his record, his Government is expected announce a cut in National Insurance, which will affect your take home pay. But one top economist has already warned any tax cuts would have to be followed by "incredibly tight spending plans".
Here The Mirror looks at what the Chancellor could announce - and how it affects you.
Income tax and National Insurance
Tory MPs are clamouring for tax cuts in a desperate bid to turn around the party's dire poll ratings. Mr Hunt is expected to cut National Insurance for around 28 million employed and self employed people. Reports suggests a 1p cut - costing about £5 billion - which would be worth £380 a year to someone earning more than £50,000.
Michelle Mone's husband gifted Tories 'over £171k' as Covid PPE row rumbles on
The Conservatives vowed at the last election that they would not raise income tax, National Insurance or VAT but as Chancellor, Mr Sunak last year increased National Insurance as he took the country to its highest tax burden in 70 years.
Alternative options include reducing the headline rate of income tax - though this may be more likely to come in the Spring. During his unsuccessful Tory leadership bid last summer when he lost to Liz Truss, Mr Sunak promised to cut income tax by one penny in the pound - from 20p to 19p by 2024 - and a further 3p off by 2029. He's gone quiet on that idea after Ms Truss triggered an economic meltdown by promising unfunded tax cuts in her mini-Budget.
Mr Hunt could instead opt to increase tax thresholds - the amount you can earn before being pushed into a higher tax bracket. The basic personal allowance currently is £12,570, meaning you can earn this much without having to pay any income tax. Earnings above this amount are subject to the basic rate of 20% and above £50,270 you pay the 40% higher rate. The Government has said these thresholds will be remain frozen until April 2028, meaning millions of people will end up in a higher tax bracket.
Business taxes
Mr Sunak dropped a big hint on Monday that cuts to business taxes are more likely than reductions to those paid by workers. The PM said he was able to move on to the "next phase" of the Government's economic plan after inflation fell to 4.6% in October.
The Chancellor will reportedly extend “full expensing” permanently, which allows companies to claim back up to 25p for every pound invested. The tax break had been due to end in March 2026.
Do you agree with the government’s plans for the Autumn Statement? Vote in our poll HERE to have your say.
Inheritance tax
Controversial plans to hand the country's wealthiest families a massive tax cut by slashing inheritance tax are thought to have been dropped. The levy is only paid by the richest 4% with couples able to hand up to £1million to their children without paying the duty.
The Institute for Fiscal Studies has said the cost of abolishing inheritance tax completely would be around £7billion. Around half (47%) of the benefit would go to the wealthiest 1% who have estates worth £2.1million or more at death. They would get an average tax cut of around £1.1million.
Labour and even some senior Tories have warned cutting inheritance tax during a cost-of-living crisis would be wrong. It is thought the Chancellor may resurrect the idea in the Spring Budget or in the Conservative Party's manifesto ahead of next year's general election.
Universal Credit
The Tories are understood to have ditched plans to snatch hundreds of pounds from families by cutting benefits. Universal Credit payments are due to increase next April by 6.7%, the inflation figure from this September. But to free up cash to pay for bungs for the rich, the Chancellor was thinking about using the lower inflation figure from October, which was 4.6%.
500 deaths is criminal and you can't blame it on strikers - Voice of the Mirror
This would have saved around £1billion, but would make life more difficult for some of the country's poorest people. Mr Hunt is now understood to have abandoned the idea, meaning benefits will rise in line with traditional September figure.
Tougher benefit sanctions regime
Plans to toughen the benefit sanctions regime will be a central part of the speech. The Government has said it wants to see a "Back to Work" drive - despite concerns sanctions lead people to find work less quickly and that they earn less when they do.
The Chancellor and the Work and Pensions Secretary Mel Stride last week gave some of the details of what is planned. People sanctioned for more than six months face losing their benefits altogether along with free NHS prescriptions and legal aid. The Treasury said "stricter sanctions" will be imposed for people "who should be looking for work but aren't" - but charities have criticised the measures as "unspeakably cruel".
Another mooted plan would see welfare recipients face tough new requirements to seek work or risk losing their benefits. The Prime Minister has said it is a "national scandal" that around two million working-age people are not in employment.
Minimum wage increases
Almost three million workers will see their wages rise with increases in both the National Living Wage and the National Minimum Wage. Mr Hunt confirmed on Tuesday that wage rates for the lowest-paid workers will change from next April. The National Living Wage will be increased to £11.44 per hour - up from the current £10.42. Eligibility for the rate will be extended by reducing the age threshold from all those over-23 to all those over-21 for the first time.
The Government said it is the biggest cash increase in the legal minimum that businesses have to pay workers in more than a decade. A 21-year-old will get a 12.4% increase, from £10.18 this year to £11.44 next year, worth almost £2,300 a year for a full-time worker.
The National Minimum Wage for younger workers will also increase. Those between the ages of 18 and 20-years-old will see their minimum pay increase to £8.60 per hour – a £1.11 hike.
Pensions triple lock
The state pension is set to rise for around 12 million pensioners. The pensions triple lock means the payment increases in line with whichever is highest out of wage growth, inflation, or 2.5%.
The full basic state pension for men born after April 1951 and women born after April 1953 is £203.85 per week. With wages currently ahead of inflation - on 8.5% - older people could see this increase to £221.17 per week.
Mr Hunt had considered tweaking the system to exclude one-off bonuses awarded to NHS staff earlier this year. But with warnings it could leave pensioners £760million worse off and the Tories still trailing Labour in the national polls, this now appears unlikely.
Help for first-time buyers
The Government is considering help for first-time buyers through the mortgage guarantee scheme which lets people take out a mortgage with a 5% deposit. Ministers could extend the scheme for another year before it ends in December.
There has also been speculation the Chancellor could cut stamp duty but due to the massive cost and the risk of fueling inflation this now appears unlikely. Under the existing regime stamp duty only applies to houses over £250,000 at which point buyers ay 5% up to the value of £925,000. First-time buyers only pay the duty if their property is over £425,000.
Booze tax
Alcohol levies are expected to be frozen in a bid to help pubs after fears the prices of wine, beer and spirits would rise. The Chancellor cut the duty charged on draught pints by 11p in August, but at the same time hiked levies on all other alcohol by an average of 10.1%.
Speculation had been mounting after the booze industry was warned by officials to expect that rates will increase by the retail prices index (RPI) measure of inflation, which currently stands at 6.1%. But it is now thought that levies will not go up. Pubs are reportedly to have their 75% business rates holiday extended.
Vape tax
Plans for a new levy aimed at discouraging children from vaping won’t be included in the Autumn Statement. An announcement on the tax will be made after a consultation closes at the beginning of next month.
Vapers face paying an extra £1.40 a week under Rishi Sunak’s plan to stop people taking up the habit. It is understood the Government is looking to copy European countries such as Germany and Italy that already have levies on vapes.
Users typically go through one 10ml bottle of e-liquid a week, which costs around £4 at present. In Germany, a £1.40 vape tax is slapped on 10ml bottles, with plans to double this to £2.80 in 2026. Italy, which in 2014 became the first country to tax e-cigarette fluid, charges a £1.10 levy on 10ml bottles.
The Government has said it wants to encourage people who smoke cigarettes to switch to vaping, whilst discouraging non-smokers - particularly children - from starting vaping.
Read more similar news:
Comments:
comments powered by Disqus
