The Treasury is “coast clear” on cutting inheritance tax in this year’s autumn statement, according to a former Treasury boss.
Sir Nicholas Macpherson proposed that lowering this tax would have more political advantages than financial ones. He said that although inheritance tax raised about £7 billion, "many mistakenly think they will pay it".
Therefore, cutting it will have a greater political return than it will cost. He emphasised that in 1939, 153,000 estates paid it, with the top rate being 50 per cent then, compared to 40 per cent presently. In 2021, 27,000 estates (3.7 per cent of deaths) paid it.
The first autumn statement was released in 1975 as a result of a law requiring the government to release two economic updates annually. The spring statement is usually presented in March, just before the start of the new financial year on April 6.
So, when is this year's autumn statement and what does it usually contain?
When is the autumn statement?
What is the autumn statement and what does it contain?
The UK government's anticipated spending and revenue generation are outlined in the autumn statement, which is an annual report given to the House of Commons by the Chancellor of the Exchequer.
Income tax and corporation tax announcements are always included in the budget as they need to be renewed by legislation each year. The budget includes suggestions for public spending for the fiscal year as well as statistics on the status of the UK economy.
Pressure on defence funding is likely to be applied to the Treasury and the Defence Secretary Grant Shapps.
How is it different from the spring budget?
In recent years, the line has blurred but the autumn statement usually provides less information about taxation. The spring budget often focuses exclusively on taxation policies, while the autumn statement typically discusses the OBR's economic forecasts and broad spending targets for ministries as well.
The budget was always announced in the spring. However, in 2017, to provide lawmakers with enough time to pass legislation before the start of the fiscal year, the budget was shifted to the autumn.
When was the last autumn statement?
The last autumn statement took place on November 17, 2022.
The 2022 autumn statement came at a tumultuous time. Mid-September saw the announcement of major tax cuts, which were mostly undone by mid-October. There had been three chancellors and three prime ministers in the space of three months, and Prime Minister Rishi Sunak claimed that the UK's reputation has taken “a bit of a knock” abroad.
What could this autumn statement cover?
It is unlikely that the autumn statement would include extravagant spending promises and tax breaks.
Given the high cost of borrowing and the increasing cost of debt payment, Jeremy Hunt is unlikely to feel like he has much wriggle room. John Dickie, the chief executive of BusinessLDN, claims that when the London business lobby group delivered its 21-item wish list to the Chancellor, it concentrated on policies that could spur development at a reasonable cost.
Dickie told the Standard: “There are things the government can do that won’t cost much money but can make a difference, in the short-term and the long-term to the growth rate of the economy and can add to the amount of money the exchequer gets in terms of revenue.
“There are some things that are very difficult unless you’re willing to spend a lot of money, but equally there’s some low-hanging fruit out there and that’s our starting point.”
Another topic this autumn statement could cover is increasing Healthy Start payments.
Councils have stated that in order to offset increases in the price of food, Healthy Start payments must be increased by 20 per cent.
According to the Local Government Association (LGA), the programme, which assists families with children under four years old or pregnant women with the cost of food and milk, does not currently pay for the cost of any first infant formula that is currently on the market.
Martin Lewis has also recommended that Hunt use his autumn statement later this month to address the "unfair" characteristics of Lifetime ISAs (LISA), which are a popular way for first-time buyers to climb the property ladder.
According to MoneySavingExpert, buyers who purchase more than the existing £450,000 cap and remove their deposit from a Lifetime ISA could only receive £937.50 for every £1,000 saved.
This, it stated, is because, in reality, LISA savers receive the 25 per cent bonus shortly after their money is deposited into the account.
For instance, each £1,000 now equals £1,250. However, savers may be subject to a 25 per cent withdrawal penalty if they take out the money before turning 60 and use it for purposes other than purchasing a qualified property. In this case, each £1,250 is reduced to £937.50 (interest accrued not included).
According to MoneySavingExpert.com, the government should permit savers who use LISA funds to purchase a house that exceeds the maximum amount to take it out immediately without incurring penalties.