The tax cuts Jeremy Hunt could make in the Budget and how it could affect you

Chancellor Jeremy Hunt has hinted that he could bring in further tax cuts in his Budget on 6 March, which could be his last fiscal statement before the next election.

In an article for the Mail on Sunday, Mr Hunt compared himself to Nigel Lawson, the Chancellor under Margaret Thatcher who brought in a range of major tax cuts.

“Just as Nigel Lawson positioned the City of London for the finance boom in the 1980s, this period of Conservative government has seen the UK positioned for the massive technological boom we’re set to see in the coming years,” he said.

Mr Hunt previously used his Autumn Statement in November to bring in cuts to national insurance for millions of workers.

With his Budget around two months away, here are the tax cuts he could bring in, and what it could mean for the money.

More cuts to national insurance

Ahead of the Autumn Statement, Mr Hunt and Prime Minister Rishi Sunak Sunak had reportedly been weighing up whether to cut income tax or national insurance.

The Chancellor did announce a 2p cut to the base rate of national insurance, as well as measures lowering the tax for people who are self-employed.

It is speculated that Mr Hunt chose to cut national insurance rather than income tax as it would be less inflationary, and also less costly.

One option is to bring in a 1p cut to the 20 per cent tax rate, paid on income between £12,571 and £50,270, which would mean around £225 in annual savings for someone on the average salary of around £35,000.

Cuts to inheritance tax

The Chancellor has been under considerable pressure in recent months from some backbench Tory MPs to cut inheritance tax.

The tax is charged at 40 per cent on an estate’s value above £325,000, or £500,000 if it is passed to a direct descendant, but is paid by very few people and applied to just 4 per cent of deaths between 2020 and 2021.

One possible option is for Mr Hunt to cut the rate at which the tax is charged, with some experts speculating it could be cut to 30 per cent or even halved to 20 per cent.

Cuts to stamp duty

Mr Hunt’s Autumn Statement had very little help for homeowners, but Treasury insiders suggested at the time that cuts to stamp duty had been considered as “options”.

Stamp duty is currently paid at 5 per cent of the value of a property over £250,000, increasing to 10 per cent for homes over £925,000.

These rates were brought in by his short-lived predecessor Kwasi Kwarteng during Liz Truss’s administration, and were extended by Mr Hunt when he entered the Treasury.

Cutting stamp duty could significantly lower the cost of someone looking to move and would stimulate the housing market, which has slowed considerably in the wake of the pandemic.

Cuts to corporation tax

Mr Hunt did not announce a cut to corporation tax in his Autumn Statement, despite suggestions it would make the UK more competitive.

The tax, which is paid by limited companies, was raised from 19 per cent to 25 per cent earlier this year, and the “full expensing” policy – by which a company can off set investment against tax – was brought in as a way to soften the blow for companies.

No cut to corporation tax was announced, but Mr Hunt did announce that the full expensing policy for businesses, due to expire next year, will be made permanent.

He also revealed that the 75 per cent business rates discount for the hospitality and leisure sectors will be extended by another year.

The Chancellor may go further in the Spring Budget by bringing in more tax cuts to boost economic growth, a move that would be especially welcome to business owners.