Company | 16th November 2023
Orca’s Autumn Statement Preview
The Chancellor Jeremy Hunt delivers his Autumn Statement on Wednesday 22 November, alongside an updated forecast from the Office of Budget Responsibility (OBR), and there is much speculation as to what he has in store for the housing market and the rates and thresholds for inheritance tax, amongst other areas. Whilst mainstream tax cuts and additional borrowing have already been ruled out through fear of re-fuelling inflation and adverse reaction from the OBR, better than expected forecasts means he has “headroom” for some concessions.
In March the OBR forecasts painted a gloomy picture, however these are expected to be revised upwards next week, with the economy now expected to grow by 0.5% this year and next. Borrowing is on course to be £20B lower than forecast in March, so the question is whether he will use this for additional spending and/or indirect tax cuts, in a bid to push up short-term growth.
So what could be in store?
Cuts to inheritance tax (IHT) and stamp duty land tax (SDLT) are being considered. Currently, if your estate is worth more than £325,000, anything above this threshold could be subject to IHT at a rate of 40 per cent. You can get an additional allowance of £175,000 if you pass your main property on to your children or grandchildren. Jeremy Hunt is considering reducing the 40 per cent rate having decided that the move would not make inflation worse. Some are even suggesting abolishing IHT altogether, though this may be politically risky.
Regarding SDLT he is considering giving new homeowners who improve the energy efficiency of their properties in the first two years of their ownership a rebate. Under the proposal, if new homeowners improved the Energy Performance Rating (EPC) of a property in the first 24 months then they would be given some SDLT money back. An alternative would be to raise the threshold at which SDLT is incurred, from the current starting point of £250,000 (in England).
Help for first time buyers is also being mooted. This could take the form of an extension of the SDLT threshold or extension of the existing mortgage guarantee scheme which helps buyers purchase their first property with just 5% deposit.
Until he delivers his Statement next week, the above remains merely speculation. He could pull a tax rabbit out of the hat though this is unlikely given the state of the economy.
We’ll bring you reaction to the Statement itself next week.
