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Jeremy Hunt hopes to kickstart the economy by slashing business taxes in his autumn statement.<\/p>\n
The Chancellor told the Daily Express it\u2019s his \u201cpriority\u201d as he seeks to boost growth.<\/p>\n
Improved public finances have raised hopes there is plenty of wriggle room for a sack of pre-Christmas giveaways.<\/p>\n
As well as helping businesses, Mr Hunt is considering cutting Inheritance Tax in next week\u2019s crunch announcement – the last major fiscal event before election year.<\/p>\n
He will pore over the final forecast from the Office of Budget for Responsibility today before making final decisions.<\/p>\n
He said: \u201cI think the priority should always be business tax cuts if you have headroom for cuts.<\/p>\n
\u201cBecause in the end what we need to do is to improve the long-term capacity of the British economy to generate the wealth we need to pay for the NHS. So that will always be the priority.\u201d<\/p>\n
The Autumn Statement will be an attempt by the government to get on the front foot following the Supreme Court’s hammer blow to the Rwanda deportation plan.<\/p>\n
Downing Street has been buoyed by the good news on inflation which plunged to 4.6 per cent last month.<\/p>\n
Government borrowing, the difference between spending and tax income, was \u00a320 billion lower last year than forecasted by the OBR.<\/p>\n
Furthermore, the Resolution Foundation has claimed Mr Hunt has an extra \u00a36.5 billion to spend because previously high inflation, coupled with record wage growth, is driving up tax revenues.<\/p>\n
READ MORE: <\/strong> Pressure mounts on Jeremy Hunt to slash inheritance tax in Autumn Statement<\/strong><\/p>\n Overall it means the government has more than \u00a326 billion of headroom, compared with \u00a36.5 billion at the time of March’s budget.<\/p>\n While some of this will be retained as a “cushion”, Mr Hunt is considering an array of tax cuts amid mounting pressure from Tory MPs.<\/p>\n But he vowed not to be irresponsible and risk inflation getting out of control again.<\/p>\n He said: \u201cWe do want to bring taxes down. There are no shortcuts to doing that. The one thing we won\u2019t do is to bring taxes down in a way that fuels inflation.<\/p>\n \u201cBecause having just halved inflation, we don\u2019t want to do anything irresponsible that will take us in the other direction.\u201d<\/p>\n The Chancellor is expected to cut taxes for small businesses, although large retailers such as supermarkets will see the amount they pay rise.<\/p>\n The threshold at which businesses pay VAT could be increased from \u00a385,000 to \u00a390,000.<\/p>\n He is also set to extend “full expensing”, a tax relief allowing businesses to offset their investments against corporate tax.<\/p>\n He has come under pressure from both Tory MPs and Labour MPs to make the move permanent after announcing only a three-year plan in the March Budget.<\/p>\n There has also been speculation that inheritance tax will be cut.<\/p>\n Don’t miss… <\/strong> One option includes halving the rate of inheritance tax, which is charged at 40 per cent for estates worth more than \u00a3325,000 with an extra \u00a3175,000 allowance towards a main residence if it is passed to children or grandchildren.<\/p>\n The Treasury is considering plans to cut the rate to 30 per cent or 40 per cent, while it is also examining proposals to increase the thresholds for the tax.<\/p>\n Mr Hunt is said to favour cutting inheritance tax rather than income tax because it would not have a big impact on inflation.<\/p>\n It is also much cheaper to cut. Abolishing inheritance tax would cost about \u00a37 billion a year, but cutting income tax by 2p in the pound would cost \u00a313.7 billion a year.<\/p>\n The hospitality industry could also be in line for an extension to business rates to protect the future of the hospitality industry and the High Street.<\/p>\n When asked today about cutting taxes, Mr Sunak said: \u201cWell the most important thing economically that\u2019s happened this week is that we met the pledge that I made to halve inflation.<\/p>\n \u201cNow of course I know people are still suffering, they have been, so there\u2019s work to do but that\u2019s an important milestone because inflation is like a tax: it makes everyone feel poorer.<\/p>\n \u201cIt puts the prices of things up, eats into your savings, your pension, and that\u2019s why it was so important to halve inflation.\u201d<\/p>\n Robert Colvile, director of the Centre for Policy Studies, said: “News that the Autumn Statement will contain positive news on business taxation is certainly welcome.<\/p>\n \u201cBusinesses need certainty to invest in the long-term and the UK’s international tax competitiveness is currently hampered by our comparatively high rates. Measures like making full expensing permanent, something the CPS has consistently called for, will provide the economic boost we need to get back to growth.”<\/p>\n
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