UK Chancellor Jeremy Hunt has pledged to put the country "on a path to a lower-tax economy" in the upcoming Autumn Statement. This has raised expectations among Conservative MPs that the Chancellor will announce cuts to both personal and business taxes.
Plans to cut inheritance tax have been postponed until next year, fuelling hopes that the Chancellor might instead focus on reducing the 20p basic rate of income tax, in line with Prime Minister Rishi Sunak's commitment to lowering the rate to 16% by the end of the next parliamentary term.
Higher-than-expected tax revenues and lower debt servicing costs have provided Chancellor Hunt with more fiscal flexibility than initially anticipated, allowing room for potential giveaways in the Autumn Statement. While initial plans were to delay headline-grabbing income tax cuts until the spring Budget, the Conservative Party's poor opinion poll ratings have exerted pressure on Hunt to act sooner.
Chancellor Hunt's allies suggest that the most significant tax cuts in the Autumn Statement will target businesses, with a focus on boosting growth. There are expectations that the Chancellor will aim to make the "full expensing" capital allowance regime permanent, costing about £9 billion annually. Full expensing allows businesses to deduct the full cost of investments in IT equipment, plant, or machinery from their profits.
While committing to not announce tax cuts that hinder the Bank of England's efforts to control inflation, Chancellor Hunt highlighted that Britain has made significant progress in halving inflation to 4.6% this year. The Autumn Statement is anticipated to provide more details on the government's economic and fiscal policies.