TOMORROW Jeremy Hunt will finally announce the government’s Autumn Statement, a financial plan that will have huge implications for your pocket.
The Chancellor is set to reveal around £25bn of brutal tax hikes, alongside spending cuts reaching £35bn.
Jeremy Hunt will unveil his Autumn Statement tomorrow
The “eye-wateringly difficult” measures are being introduced to fill an estimated £60bn black hole in the public purse.
The gaping hole was caused by a combination of the pandemic, Mad Vlad Putin’s war in Ukraine, soaring energy costs and Liz Truss’ disastrous mini budget.
Rishi Sunak believes the gap must be filled in order to tackle soaring inflation and the crippling cost of living crisis.
Today the Office for National Statistics announced inflation is sitting at a staggering 11.1 per cent – a 41 year high for the UK.
In the weeks building up to the Autumn Statement, Treasury sources have dropped a number of hints about what to expect.
Many middle earners will end up handing over more money to fill government coffers.
But some vulnerable Brits will find themselves better off, as more cost of living help is on the way.
Yesterday the PM vowed to place “fairness and compassion at the heart of all decisions”.
Here is everything we know so far about tomorrow’s announcements:
Mr Hunt is considering extending a freeze on income tax thresholds until 2028 – dragging millions more into a higher rate of tax.
The freeze was originally supposed to end in 2026.
By extending it, Brits who earn over £50,000 a year could end up paying £3,659 more in tax overall.
A stealth tax is form a tax collected in a way that isn’t obvious – and you might not even notice it.
While the government doesn’t change the headline rate, you end up paying more money.
That’s because while salaries rise, the tax threshold stays the same, and so you get dragged into paying higher rates.
Tax thresholds would usually be tweaked to take into account inflation and rises in earnings.
PENSION TRIPLE LOCK
The issue of keeping or ditching the pension triple lock has been a massive subject of debate in Westminster.
With its safety previously called into question, MPs from all political parties have pleaded with Mr Hunt to keep the policy in place.
The popular triple lock sees pension payments increase in line with whichever of the following is highest:
- Earnings – the average percentage growth in wages in Great Britain
- Prices – the rising cost of living in the UK, as measured by the Consumer Prices Index (CPI)
In what will potentially be a major win for pensioners, so far the triple lock seems set to stay.
While the plan has yet to be confirmed, the government hopes it will be seen as “fair and compassionate”.
The Chancellor is understood to be in favour of uprating benefits in line with inflation next April.
Alongside the pension triple lock, what to do with Universal Credit has been a major source of contention in Westminster.
Many Tory MPs have called for benefits and inflation to stay aligned, and Mr Sunak promised this himself when he was Chancellor earlier in the year.
As things stand it looks like that will go ahead.
A council tax hike is on the cards tomorrow, Mr Hunt suggested yesterday.
The Chancellor appeared to confirm that Brits will be whacked under plans to let local authorities increase rates.
But he insisted that richer residents will bear the brunt of the sweeping tax rises set to be unleashed in a scramble to balance the books.
Brits pay more council tax depending on what band their home falls in – with A paying least and E the most.
Currently town halls are not allowed to increase council tax above 2.99 per cent – plus a one per cent social care levy – without holding a local referendum.
Government sources say Mr Hunt is considering plans to increase this to 5 per cent to help pay for stretched services being squeezed by central government cuts.
COST OF LIVING PAYMENTS
The Chancellor is planning to give eight million hard-up households hundreds of pounds in handouts to cushion the blow of higher energy bills.
Mr Hunt is expected to announce another round of cost of living payments at Thursday’s Budget – putting the most vulnerable in line for a £1,100 boost.
Reviving the plan he cooked up as Chancellor last summer, benefit claimants will get £650, poor pensioners will get £300 and there will be another £150 disability payment.
A Government source said: “Rishi saw his cost of living plan work last time and so is sticking with it again”.
NATIONAL LIVING WAGE HIKE
Mr Hunt is planning to boost the national living wage in an effort to help Brits through the cost of living crisis.
The Chancellor is preparing a ten per cent hike, which would see the threshold rise from £9.50 to £10.40 an hour.
The move would mean a pay day for more than 2.5m Brits.
The national living wage is the minimum amount all employers have to pay staff aged 23 and over.
Those younger than 23 can be paid the minimum wage instead, which is £9.18 for 21 – 22-year-olds and £6.83 for those aged 18 – 20.
The national living wage is different from the real living wage, which sits at £11.95 in London and £10.90 for the rest of the UK.
The real living wage is set by the charity Living Wage Foundation, as isn’t compulsory for bosses to follow.
However, 11,000 UK businesses voluntarily pay it to staff members.
HIGH EARNERS’ INCOME TAX HIKE
Mr Hunt is mulling a shock tax raid on the rich that would see tens of thousands of extra high earners slapped with the top rate.
The £150,000 threshold at which the additional rate of income tax kicks in could be lowered and that rate of 45p in the pound even raised.
It would mark a spectacular change in direction just six weeks after Ms Truss tried to reduced it to 40p and would break a key 2019 Tory manifesto pledge not to raise income tax.
The Chancellor is eyeing a fresh windfall tax grab on the eye-watering profits being made by energy giants.
The PM himself introduced the current 25 per cent levy as Chancellor to raise £7bn this year and £10bn next year.
Demands for a deeper levy flared last week as Shell posted profits of £8bn for just the last three months.
HOAR understands that the Treasury wants to raise the windfall tax by five points to 30 per cent.