Autumn Statement: Tax changes Hunt could announce for next fiscal year | Personal Finance | Finance

Chancellor Jeremy Hunt’s Autumn Statement left the country facing its biggest tax burden since the Second World War, leading many to question what could be for the next fiscal year.

Mr Hunt will announce the new Autumn Statement on November 22, and analysts expect he may address a range of tax policies in his speech.

But while Mr Hunt has played down the likelihood of major tax cuts and the Government maintains its focus on “stability”, low public borrowing figures and higher-than-expected tax receipts could “harm to make available”.

Colin Graham, head of tax policy at PwC, said: “The Chancellor is doing his best to manage expectations ahead of the Autumn Statement, stressing that there is no chance of tax cuts being delivered until the economy improves. economy.

“While it appears that no major tax changes are on the way at the moment, lower than expected public borrowing figures and higher than expected tax receipts could also provide good for signs that inflation is being brought under control.”

Mr Graham explained that the Government has tried, from October 2022, to focus on stability. For businesses, the most frequent feedback was the need for consistency and a stable platform to facilitate investment.

In that context, Mr Graham said: “A tax roadmap to encourage long-term growth and investment would be welcome, particularly given the increase in the headline rate of Corporation Tax to 25 per cent from April this year and the concurrent end of the super deductible relief.

“Many will welcome the prospect of extending the full cost window that has replaced it given the popularity and simplicity of the scheme. It is also hoped that there will be clarity on merging R&D schemes.”

Mr Graham said there is also a chance that some sort of relief will be announced for the small businesses affected by next year’s business rates revaluation.

He said: “Advertisements that go towards encouraging long-term growth could be achieved by supporting high street retailers and hospitality, along with encouraging emerging markets, such as green investment incentives.”

Income tax

However, income tax cuts are less likely to be announced, analysts said. Christine Cairns, tax partner at PwC, said: “Despite pressure to reduce main tax rates and increase allowances, we are unlikely to see any movement in this regard at the Autumn Statement with the Chancellor committed to increasing tax revenue through the fiscal pull . effect of bonds and freezing concessions.

“The Chancellor has a difficult balancing act; Fiscal drag is rampant and relaxing is expensive, but the burden is only increasing in real terms across millions of people, weighing on the ‘feel good’ effect of could encourage growth to support a less painful way of lifting. taxes.”

Sian Steele, head of tax at Evelyn Partners, echoed this view, saying: “Hunt is unlikely to cut income tax, which has angered many in his party.

“Perhaps the tax-raising effects of the frozen thresholds have not yet been fully understood by the public: the long-term reduction in the personal allowance and higher rate threshold will be equivalent to a 3.5 per cent hike by the time it operates. in the main tax rates for average incomes, according to one estimate.”

The additional rate threshold has fallen to £125,140 this year for the highest earners, and due to the withdrawal of the personal allowance, they are subject to a marginal tax rate of 60 per cent on incomes of £100,000 up to that mark .

Miss Steele said: “There is a limited amount of speculation that Hunt could ease the tax burden on middle-aged people by reversing the freeze on allowances and raising the top rate threshold from £50,270, where it has stood since the money increased slightly . April 2021 and is due to stay until 2028.

“This freeze will force at least 2.1 million extra earners to pay a higher rate of tax at 40 per cent, but it is earning the Exchequer billions, and with the current risk of inflation Hunt seems unlikely to step down therefore unexpected in the Autumn Statement. .

“But if public finances and the inflation outlook improve significantly by the time of the Spring Budget … who knows?”

Capital tax

According to Alex Henderson, tax partner at PwC, the Chancellor may see the Autumn Statement and next year’s Spring Budget as an opportunity to include a wishful thinking story.

He explained: “The reform of capital taxes such as capital gains tax (CGT) and inheritance tax (IHT) could be a way of demonstrating that ambition, however, although they are much smaller than the main income tax , VAT and NIC, they still rise. useful amounts of income for a Chancellor trying to balance the books.”

The Chancellor may want to focus on the interaction between the two and the “deployment” from income tax instead.

Mr Henderson said: “Looking at these taxes together could provide scope to target taxes and reliefs and simplify the whole system.

“Any move to change capital taxes, where gains are usually accrued over a longer period, is complicated by the higher inflationary environment, which could result in taxpayers paying more. This could be another negative effect on inflation, undermining the Chancellor’s likely call for further long-term investment in the UK.

“An element of efficient design in capital taxes is to get longer-term value accrual and to marry the tax liability to pay the funds. So with careful targeting, this is an area where there is scope for a ‘win/win’ for the Chancellor: if it stimulates growth, both the taxpayer and the Exchequer will share the proceeds.”

Land Tax Stamp Duty

Stamp Duty Land Tax (SDLT) is charged at five per cent between £250,001 and £925,000, starts at £425,000 for first-time buyers, and rises to 12 per cent for properties over £1.5 million. It raises £14billion to £15billion a year for the Exchequer, compared to £3.68billion in 2000/01.

Ms Steele said: “SDLT has for some time been one of several fiscal cash cows for the Exchequer, with receipts increasing significantly year on year as UK property prices have increased over the long term. The perception that it is a relatively effective ‘stealth tax’ has made it very popular with prospective buyers and home buyers.

“But it has also come under increasing criticism for crowding out certain parts of the property market, discouraging older homeowners from downsizing, and even harming UK business by restricting mobility labour.”

Ms Steele said the notion that SDLT is acting as a push to move at this and other rungs on the property ladder was what drove him into the Autumn Statement speculation.

She said: “Reports suggest that the Conservatives are looking at some form of further relief or reduction from stamp duty, which could be a popular but relatively inexpensive measure, as is the case with IHT.

“Many of the SDLT reliefs and holidays – such as raising the threshold to £500,000 for all purchasers during the Covid crisis in 2020/21 – are reasonably easy to implement, although they cause concern for those caught on the wrong side of the deadlines.

“It has also been reported that Hunt could link stamp duty relief or rebates for first-time buyers to green home improvements after the purchase, and it is thought he will expand the Help to Buy mortgage guarantee scheme to help more first-time buyers get loans. with a five percent deposit.”

The scheme has been extended for 12 months to end in December 2023, but Ms Steele says we may continue for another year.