Chancellor Jeremy Hunt is considering cutting inheritance tax and announcing measures to promote business investment in his Autumn Statement next week.
Mr Hunt is set to receive the latest forecast from the Office for Budget Responsibility on Friday amid hopes the Government may have more fiscal headroom than thought. His speech on Wednesday will come days after ONS figures showed inflation was 4.6% in October.
The Chancellor this week said he would use the statement to address labour supply issues and business investment. Meanwhile multiple reports have suggested inheritance taxes could be cut, although no final decision is believed to have been made.
The Financial Times also reported the Chancellor is hoping to make tax breaks for business permanent.
Mr Hunt used the Budget in March to announce a three-year policy of “full expensing” where all money a company invests in IT equipment, plant or machinery can immediately be deducted in full from taxable profit. Tory and opposition MPs have urged the Chancellor to make the change permanent, though he has noted that it would be a £10bn commitment.
Mr Hunt and Prime Minister Rishi Sunak will be hoping the Autumn Statement will boost a struggling Government that was hit this week by the Supreme Court ruling against its flagship Rwanda asylum policy. Tory backbenchers angry at the failure of the Rwanda plans have also been demanding tax cuts from the Chancellor.
The PA news agency reported that the Prime Minister offered little clue as to the contents of the autumn statement when he spoke to broadcasters during a visit to Bolsover on Friday.
Asked about scope for tax cuts, Rishi Sunak said: “Well the most important thing economically that’s happened this week is that we met the pledge that I made to halve inflation.
“Now of course I know people are still suffering, they have been, so there’s work to do but that’s an important milestone because inflation is like a tax: it makes everyone feel poorer. It puts the prices of things up, eats into your savings, your pension, and that’s why it was so important to halve inflation.
“I’ve delivered on that because I want to ease the burden on the cost of living for families.
“But that allows us now to see what other support we can provide. For example, this winter pensioners will receive hundreds of pounds of extra support alongside their winter fuel payment to help them with energy bills because we know they’re high.
“But look, this Conservative Government has delivered, we are starting to ease the burden on the cost of living.
“There’s work to do and you’ll hear more about that next week in the autumn statement.”
Speaking at Prime Minister’s Questions on Wednesday, Buckingham's Conservative MP Greg Smith said: “The inflation numbers this morning were very welcome, but the tax burden continues to bite.
“So, will the Prime Minister agree in principle with me that the concept of higher rate tax was never meant to drag in police sergeants, band eight nurses, teachers with additional responsibilities and others, and that a priority for his Treasury ministers should be to return fairness to the tax thresholds?”
Mr Sunak said: “I agree with (Mr Smith) and I am pleased that the vast majority of people will continue not to pay the higher rate. I share his ambition to cut taxes for working people.
“Right now inflation is falling and we’re sticking to our plan … delivering a halving of it this year, because that is the most effective tax cut we could have delivered for the British people this year, rather than making it worse, as the party opposite would.”
He added: “I absolutely share his ambition to cut taxes for working people, and, as we stabilise the economy, that’s something that both the Chancellor and I are keen to deliver.”
The Government has also announced a fresh welfare crackdown amid efforts to get people back into work. Under a toughened sanctions regime, free prescriptions and legal aid will be cut off for benefit claimants who are deemed fit to work and do not seek employment, while the Treasury said digital tools will also be used to “track” attendance at job fairs and interviews.
