Autumn Statement UK 2023: Fiscal Drag Pays for Tax Cuts

Chancellor Jeremy Hunt will deliver the Autumn Statement in the House of Commons on Wednesday, 22 November 2023.

The Autumn Statement is one of the key financial events in the political calendar.

The chancellor updates MPs on the country’s finances and the government’s tax and public spending plans, based on the latest forecasts from the Office for Budget Responsibility (OBR).

The independent OBR, which checks the health of the economy, will present its own assessment of Mr Hunt’s plans to Parliament.

What are the key challenges facing the UK economy?

  • Inflation is still high

  • Growth has stalled

  • Government borrowing is soaring

What could be in the Autumn Statement?

  • Income tax cuts

  • Tougher benefits rules

  • First-time buyer help

  • Inheritance tax and stamp duty cuts

  • ISAs - New

More for the haves; less for the havenots … :roll_eyes:

Cutting inheritance tax – which is paid by fewer than 4% of all estates, affecting largely the richest in society – would, however, come with the government on track to raise a “gargantuan” £40bn from freezing income tax thresholds, according to analysis by the Resolution Foundation thinktank.

Hunt is also weighing up cuts to benefits, drawing an angry response from union leaders and charities who warned the chancellor risked ignoring the pressures facing millions of households amid the cost of living crisis.

Adam Corlett, the principal economist at the Resolution Foundation, said the government’s six-year freeze in income tax thresholds had “turned from an £8bn ‘stealth’ tax to a gargantuan £40bn tax rise” because of higher inflation.

“Any pre-election tax cuts – such as cutting inheritance tax for a small number of wealthy estates – would effectively be funded by higher taxes on the incomes of 36 million people,” he said.

The chancellor is expected to have been handed improved forecasts for the public finances from the Office for Budget Responsibility (OBR), the Treasury’s economics forecaster, as soaring tax receipts put government borrowing on track to come in about £20bn lower than expected for the current financial year.

Paul Nowak, the general secretary of the TUC, said any improvement in the government finances should be directed to tackling severe problems facing millions of households instead of helping the very wealthy.

“Only a tiny proportion of estates pay inheritance tax in the UK. Raiding the public purse to line the pockets of the rich (1) is the last thing the country needs,” he said.

(1) Pocket-lining is what Tories do best … :pound::euro::dollar:

Seeing as none of the weathy pay inheritance tax that is an oxymoron .
Starting with our dear king who has not paid one penny on the billions he inherited from mummy .
Nor will William pay a penny when Daddy shuffles off this mortal coil .

The rich don’t pay inheritance tax
The poor don’t pay in inheritance tax .

Those who pay inheritance tax are the middle of the road people who aspired to do well and now have to pay off a greedy government before their offspring can inherit .

A number of options on income tax and national insurance are also been drawn up for consideration. They include potential reductions to the headline rates of income tax and national insurance, although it is unclear exactly which rates are being considered.

When he was chancellor, Sunak had promised by 2024 to cut a penny off the basic rate of income tax, currently 20 per cent. While running to become Conservative leader, he promised to bring it down to 16 per cent by 2029.

Another option under consideration is to raise the tax thresholds. Three sources said raising the higher-rate threshold, above which people pay the 40 per cent rate, had been floated. It is currently £50,271 and has been frozen for six years.

Also frozen for the last six years have been the personal allowance and national insurance primary threshold, which are both set at £12,570. Due to soaring inflation and wage growth, millions of taxpayers are being pushed into higher tax bands through “fiscal drag”, which is when a worker’s wages rise but the threshold at which higher tax is charged remains the same.

HM Revenue & Customs figures show 4.2 million more workers now pay the 20 per cent rate of income tax compared with three years ago, while 1.6 million have been dragged into the 40 per cent rate.

This has netted the Treasury tens of billions of pounds but contributed to raising the tax burden to its highest level in 70 years.

There’s nothing a Tory likes better than putting peasants in their place and keeping them there … :075:

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What time is the Autumn Statement?

Setting your alarm to make sure you don’t miss the speech?

We’re expecting the chancellor to deliver the Autumn Statement in the House of Commons around 12:30 GMT, straight after Prime Minister’s Questions.

Chancellor Jeremy Hunt has started his Autumn Statement.

Details - Personal not Business

  • The OBR says headline inflation will fall to 2.8% by the end of 2024, before falling to the 2% target in 2025, the chancellor says.

  • Benefits will increase next year by 6.7%, the inflation rate for September.

  • The Local Housing Allowance rate will rise to the 30th percentile of local market rents. This will give 1.6 million households an average of £800 of support next year, he says

  • Hunt increases duty on hand-rolling tobacco by an additional 10% above the tobacco duty escalator. Meanwhile he freezes all alcohol duty until 1 August next year.

  • Hunt says he will honour the government’s commitment to the pensions triple lock in full. He says from April 2024 the government will increase the full new state pension by 8.5% to £221.20 a week, worth up to £900 more a year

  • Hunt announces that he will consult on giving people one pension pot for life. He says these reforms could help unlock an “extra £1,000 a year in retirement for an average earner saving from 18”.

  • Class 2 National Insurance paid by self-employed to be abolished, saving the average self-employed person £192 a year

  • Hunt says the main employee National Insurance rate will be cut by 2 percentage points from 12% to 10%. from 6 January - someone on the average salary of £35,000 will save over £450 a year.

All well and good but remember - any cuts will be funded by the ongoing freeze in income tax thresholds dragging many into paying more tax.

Tax breaks for businesses

The government is making permanent a taxbreak for businesses which allows them to offset investment in machinery, IT and equipment against corporation tax

It is also extending business rate relief for many small firms, including pubs and other hospitality businesses


I am very pleased that he made no changes to Inheritance Tax, and has concentrated on working age people.

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I’m not .
You are pleased because you have as you have as you have often said so on here made provision for avoiding it .
That’s ok it’s not illegal to-take measures to avoid it .
Just that some people cannot .
They are not in that position .
It means that unlike you they won’t be able to put sftuff in their children’s names .
Perhaps a childless widow who would like to leave something to her nephew but whose only asset is her small house in the south which is now well over the nil rate band of £325 k
Unlike King Charles ( who paid nothing ) and the likes of Mr Dyson wh has already settled on his children vast acres of farmland she will be hit by the full whack at 40% .
It’s grossly unfair.
Of course she could put it in his name he will have to pay tax on the gift and then if she needs care home fees the council will chase him and probably take it.
Or she might be lucky and the tax payer stumps up for her care .

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Its not been bad, for us “Wealth Generators” :grin:

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We the OAPs get a pension rise .

Yes, you got quite a few percentages for the coffers!

Families will be £1,900 poorer at the end of this parliament compared with the beginning, a think tank has said.

The Resolution Foundation said this government would set a “grim” new record for living standards going down. It also said Chancellor Jeremy Hunt’s Autumn Statement changes, including a National Insurance cut, handed the next parliament “implausible” cuts to public sector spending.

Responding to the Autumn Statement, the Resolution Foundation said that with the next general election due within the next year, “this parliament is on track to be the first in which real household disposable incomes have fallen”. The independent think tank, which focuses on improving living standards for those on low to middle incomes, said Mr Hunt’s plans “failed to end a wider economic stagnation”.

Despite “tax-cutting rhetoric” and about £20bn of tax cuts announced in the Autumn Statement, there had already been £90bn of tax rises announced by the government - so taxes are rising by the equivalent of £4,300 per household between 2019-20 and 2028-29, the think tank said.

The chancellor managed to make these cuts at the expense of not raising public spending in line with the pace of general price rises, meaning departments such as justice, local government and the Home Office face a £17bn budget cut by 2027-28, it added.

Quite. Hunt makes extensive use of smoke and mirrors … :face_with_raised_eyebrow: