Speculation mounts as Hunt fine tunes Autumn Statement
Proactive Investors – With the chancellor, Jeremy Hunt’s autumn statement just days away, press speculation remained fevered as to what may or may not be within the fiscal package which is aiming to fill a black hole estimated by economists at around £60bn.
The Times has run the rule over some of the touted changes, and their likely damage, and given what it called a Bombshell rating of 1 to 5, with 5 being the most destructive.
Freezing income tax thresholds – one of the key tax-raising measures being planned is to freeze the rates at which people pay tax in a move that could bring in £30bn a year by 2026.
The Centre for Economics and Business Research think tank said the move would mean 3mln workers paying more income tax.
The Times gave this a bombshell rating of 4/5
Reducing the threshold for the top rate of tax – Hunt could lower the income level at which the top 45p rate kicks in from £150,000 to £125,000, pulling thousands into the new top rate of tax over the next four years.
Moving the 45p rate threshold will raise about £1.3bn a year.
Bombshell rating: 3/5
READ: Autumn Statement – what to expect and what it could mean for households, companies and investors
Taxing electric cars for the first time – Owners of most petrol and diesel cars pay £165 a year in road tax but electric vehicles are exempt. Hunt could charge owners of electric vehicles road tax — probably beginning in 2025-26.
Bombshell rating: 4/5
Raising council tax – Currently local authorities cannot raise council tax above 2.99% plus a 1% levy for social care without a local referendum. Hunt is considering raising this threshold to reduce pressure on services.
Bombshell rating: 5/5
Cutting public spending – Hunt will announce that there will be no more money to help government departments with additional costs brought about through inflation. Instead, departments will be asked to find savings in other parts of their budget to provide more cash to frontline services.
Bombshell rating: 4/5
Extended energy windfall tax – Rishi Sunak, when he was chancellor, imposed a 25% levy on oil and gas company profits and Hunt is expected to go further and increase this to 35% and extend the length of the new tax until 2028.
The scheme will also be extended to cover electricity generators and is expected to raise £45bn over the next five years.
Bombshell rating: 4/5
Reform capital gains tax – Higher rate taxpayers pay a 20% rate on profits from assets such as shares and 28% on residential property, such as second homes, above a £12,300 tax-free allowance. Hunt could cut this threshold to £6,000 — dragging more people into paying the tax for the first time.
Bombshell rating: 3/5
Freeze the lifetime pension allowance – Workers are allowed to save up to £1,073,100 in their pension pots without being taxed. Hunt could freeze this threshold until 2027.
Bombshell rating: 3/5
Dividend tax – The annual tax-free dividend allowance has already been reduced from £5,000 in 2018 to its level of £2,000. Above this rate higher-rate taxpayers pay a tax of 33.75% on these profits and The Treasury is understood to have modelled a 1.25%.
Bombshell rating: 3/5
Freeze inheritance tax thresholds – Hunt could announce a further extension to the freeze on inheritance tax thresholds beyond the existing 2025-26.
Bombshell rating: 4/5
