Better-than-expected public finance projections from the Office of Budget Responsibility, the independent watchdog to the Treasury, mean that Hunt’s headroom to fund tax cuts or spending had grown to between £13bn and £15bn, according to a report by the Telegraph.
The Chancellor has ruled out cuts to personal taxes, fearing that such a move would fuel a rise in inflation which is currently 6.7 per cent. However, cuts to inheritance tax and stamp duty are considered to have less of an impact on inflation.
Facing weak growth forecasts, Hunt is said to be rethinking his initial plan to wait until the March 2024 Budget to cut taxes to stimulate the economy. However, reports suggest that if the cuts are deemed unaffordable, changes may still be pushed back to March next year.
The Conservative Party is currently trailing Labour in the polls and making such cuts would be one way to try and improve Prime Minister Rishi Sunak and his party’s popularity.
Suggestions of the changes the Chancellor may make include a cut to the headline rate of inheritance tax, currently 40 per cent, and a stamp duty rebate for buyers who improve the energy efficiency of their homes.
A freeze on tax thresholds and soaring property prices have meant more households are being impacted by inheritance tax. According to analysis by the Institute of Fiscal Studies, one in eight families could be dragged into the inheritance tax net if the rules remain unchanged.
Speaking to The Telegraph, Rob Gill of broker Altura Mortgage Finance said that slashing stamp duty “would be a popular, impactful move that would boost the property market and the wider economy, so will surely be hard for the Chancellor to resist.”