Hunt’s Autumn Statement spells out tax rises and spending cuts

Chancellor Jeremy Hunt today unveiled a £55bn package of tax rises and spending cuts as he confirmed the UK was now in recession.

He said that his Autumn Statement represented “a balanced plan for stability, a plan for growth and a plan for public services”.

The threshold for when the highest earners start paying the top 45p rate of tax will be reduced from £150,000 to £125,140.

Income tax, National Insurance and inheritance tax thresholds will also be frozen for a further two years, on top of the existing four-year freeze, until April 2028.

The dividend allowance will also be cut from £2,000 to £1,000 next year, and then to £500 from April 2024.

And the Annual Exempt Amount in capital gains tax will be reduced from £12,300 to £6,000 next year and then to £3,000 from April 2024.

Amongst his raft of measures, he confirmed that the National Living Wage will go up from £9.50 an hour for over-23s to £10.42 from April next year. That represents an annual pay rise of more than £1,600 for a full-time worker.

A £13.6bn business rates relief package was also unveiled to counter the rise in the levy for hundreds of thousands of companies set to take place in April next year.

Mr Hunt said that the five years temporary relief scheme meant that two-thirds of properties would not need to pay any more in business rates next year.

To help businesses adjust to the revaluation of their properties, which takes effect from April 2023, the chancellor announced a £1.6bn Transitional Relief scheme to cap bill increases for those who will see higher bills. The Treasury says this would limit bill increases for the smallest properties to five per cent.

Businesses seeing lower bills as a result of the revaluation will benefit from that decrease in full straight away, as the chancellor abolished downwards transitional reliefs caps.

Small businesses who lose eligibility for either Small Business or Rural Rate Relief as a result of the new property revaluations will see their bill increases capped at £50 a month through a new separate scheme worth more than £500m.

The chancellor also told the Commons that electric vehicles will no longer be exempt from vehicle excise duty from 2025. He said that move would make the motoring tax system “fairer”. However, he said that company car tax rates will “remain lower for electric vehicles”.

The state pension, benefits and tax credits will rise by 10.1 per cent, in line with inflation.

The chancellor revealed extended but more limited measures to help households with energy bills beyond April and said that targeted support for businesses would be announced at a later time.

The existing “energy profits levy” on oil and gas companies will be increased from 25 per cent to 35 per cent and extended from four years to six years.

There will also be a new 45 per cent levy on the excess profits of electricity generators over a certain threshold.

The chancellor confirmed that the core Northern Powerhouse Rail and HS2 to Manchester infrastructure projects would go ahead along with the Sizewell C nuclear plant.

Plans for the second round of the Levelling Up Fund were confirmed, with at least £1.7bn to be allocated to priority local infrastructure projects around the UK before the end of the year.

Mr Hunt said planned Investment zones would now focus on “leveraging our research strengths by being centred on universities.”