- By Michael Race, Peter Saull & Faisal Islam
- BBC news
The BBC says the Chancellor is considering cuts to inheritance tax and business tax in next week’s Autumn Statement.
It is expected that Jeremy Hunt’s decision will depend on the latest predictions from the UK’s chief economic forecaster.
A Treasury source said no final decision had been made but Mr Hunt refused to rule out the possibility in an interview with the BBC.
It comes as he announced a £4.5 billion investment to boost British manufacturing.
Mr Hunt said businesses in the automotive, aerospace, life sciences and clean energy sectors would be among the companies receiving government funding where “the UK is or could be leading the world”.
The Chancellor is expected to receive the latest economic forecast from the Office for Budget Responsibility (OBR) – which assesses the UK’s financial situation and is independent of the government – on Friday. .
Although it is understood Mr Hunt will consider tax cuts later in the week, As the Financial Times first reported, A Treasury source told the BBC it was possible such policy decisions would be delayed until spring.
Mr Hunt has previously said cutting taxes is “virtually impossible” and instead warned of “really very difficult decisions” in Wednesday’s Autumn Statement, which he will outline. draft the government’s latest spending and tax decisions.
Despite lowering expectations for tax cuts, economists estimate the chancellor could have more than £10 billion to spend on such measures.
In an interview with the BBC, Mr Hunt refused to rule out cutting inheritance tax, saying: “The best way we can reduce people’s tax burden is to grow the economy.”
According to the Institute for Fiscal Studies, tax rates in the UK are currently at their highest since records began 70 years ago. The government’s largest source of revenue is through taxes on people’s income, called income taxes, but there has been no speculation about cutting that source of revenue.
However, the BBC has learned that Mr Hunt is considering cutting inheritance tax, which is a 40% tax on the value of the assets – property, money and assets – of a deceased person.
Tax is charged on the portion of the estate above the threshold, but only applies to around 4% of the estate and no tax is payable if the estate is worth less than £325,000 or if anything exceeds this threshold are left to an investor. spouse, civil partner, charity or amateur sports club in the community.
If the house forms part of an estate and a person’s descendants inherit it, the threshold can be as high as £500,000.
Taxes cause a lot of debate, partly because many people are concerned about it and find it difficult to understand.
There are also reports that the government is considering using October’s inflation figure of 4.6%, rather than September’s inflation figure of 6.7%, to increase benefits, which would cut Working-age welfare spending is around £3 billion. The government usually uses the September inflation date to set the increase.
The Prime Minister did not deny such a move, but said the government would be “compassionate” and that the welfare system needed reform “because we believe that paying for work is an important part of success.” our economy”.
It is unclear what business tax cuts the chancellor might cut, but there are expectations that tax cuts, which would allow companies to offset 100% of the money they spend on new machinery and equipment against their profits, would be extended or may be made permanent.
The policy – known as “full cost” – will expire at the end of the 2025 tax year.
The amount of cash the government deems available for spending – and implementing tax cuts – is subject to its self-imposed spending and tax – or fiscal – rules. Whether and how the government meets its regulations depends on its policy choices.
Most governments of rich countries follow fiscal rules to try to maintain credibility with the financial markets that help fund their plans.
Labor leader Sir Keir Starmer said he would wait to see the content of the Autumn Declaration before commenting.
The prime minister’s push for manufacturers comes against a backdrop of recent sluggish economic growth and fears the UK could lose out on investment opportunities to other countries in industries that create future jobs.
Mr Hunt told the BBC that he had spoken to Elon Musk, the owner of electric car company Tesla, about investing in the UK.
“I’d love to have a Tesla factory in the UK any day now. Let’s be clear, it’s a great company,” he said, adding that £2 billion of that money was earmarked for the industry automobile industry to develop zero-emission vehicles.
“I talked to Elon Musk about this and he said it’s not about support but about the environment. And he loves London because there’s a lot of tech going on and Tesla is basically a technology company, so let’s see what happens,” he added.
In an interview with Saturday’s Daily Telegraph, Mr Hunt again did not explicitly confirm whether tax cuts would be announced – but said he would use the Autumn Statement to ” show the country that there is a path” toward a lower tax economy.