Budget 2024: What is Jeremy Hunt’s record on cutting and raising taxes?
The chancellor wants to “lighten the tax burden” – but has suggested he might not have the means
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Your support makes all the difference.Jeremy Hunt will make his spring Budget announcement this week, amid reports he could cut taxes for UK households in some fashion.
Amongst the rumoured measures is a reduction to income tax, another national insurance cut and even scrapping inheritance tax.
However, Mr Hunt has attempted to manage expectations in recent weeks, stressing that he is focused on the long term.
“It doesn’t look to me like we will have the same scope for cutting taxes in the spring Budget that we had in the Autumn Statement,” the chancellor said in February. “But we also want to be clear that the direction of travel we want to go in is to lighten the tax burden.”
The Institute for Fiscal Studies (IFS) has expressed concern ahead of the budget, warning the chancellor not to ignore the impacts of higher inflation on public service budgets to favour of eye-catching tax cuts.
Here’s your guide to all the tax initiatives Mr Hunt has put in place so far:
Income Tax
Mr Hunt’s first move as chancellor was actually to increase income tax. Or rather, he reversed the disastrous Kwasi Kwarteng mini-budget’s 1 per cent reduction of the basic rate to 19 per cent, returning it to 20.
The chancellor also undid the move to abolish the highest rate of tax, which remains 45 per cent on income over £125,140.
This retained the three rates the UK has kept since 2013/14, with a basic rate of 20 per cent (before which you pay no tax), a higher rate of 40, and highest rate of 45. Mr Hunt has not committed to an income tax rate reduction during his time as chancellor.
However, in his 2022 autumn statement, the chancellor did elect to extend the income tax threshold freeze to April 2028. First announced by then-chancellor Rishi Sunak in 2021, this measure means that the income level at which you start paying tax, or enter a higher rate, has not gone up since 2019/20.
Critics have called this a stealth tax which produces an effect called fiscal drag. This means that, as wages increase with inflation, more and more people are dragged into paying higher rates of tax on their incomes – which they could avoid if the rates continued to rise annually.
The respected Institute for Fiscal Studies research group has branded it a stealthy and arbitrary way to raise tax revenue which may even reduce household incomes more in the long-term than any tax cut could raise them. The Office for Budget Responsibility predicts the policy will raise the government £35 billion a year by 2028/29.
Tax burden: unchanged (or “stealth” raised)
National Insurance
Mr Hunt reduced National Insurance contributions from 12 per cent to 10 per cent in his 2023 autumn statement. Coming into effect from January 2024, it is the lowest the rate has been since 2010.
The change affected 27 million people, with employees now paying 10 per cent on income between £242 and £967 a week. The 2 per cent rate on earnings above £967 a week remained unchanged. According to the treasury, the tax cut was worth £450 for the average employee on £35,400.
However, the Resolution Foundation economic think tank points out that this tax cut will only benefit the top half of earners with incomes of £26,000 or more.
Chief Executive Torsten Bell argues that, as income tax bills effectively go up from April (due to the threshold freeze): “the net effect will be a tax cut for the top half of earners, and tax rises (or no change) for the bottom half”.
Tax burden: reduced
Capital Gains
Capital Gains Tax is paid on the gain when you sell most high-value assets. It applies to personal possessions (apart from your car), property that’s not your main home, some shares, and business assets.
In his 2022 autumn statement, Mr Hunt reduced the Capital Gains tax-free allowance from £12,300 to £6,000. From April 2024, it will reduce again to £3,000. The treasury predicts this measure will boost government finances by £440 million a year by 2027/28.
Tax burden: raised
Stamp Duty
Of the few things Mr Hunt chose not to revert from the mini-budget, was Stamp Duty. This is a tax you might have to pay when you buy residential properties or land over a certain price.
From 2022, the value of property on which you have to pay Stamp Duty doubled from £125,000 to £250,000.
There is also a relief for first time buyers, which was equally put up from £300,000 to £425,000. The new thresholds also apply to those buying additional properties, although the additional 3 per cent rate remains.
In essence, this measure makes it cheaper to purchase a home. The treasury say the purpose of the policy is to “support the housing market and the hundreds of thousands of jobs and businesses which rely on it”.
Tax burden: reduced
Council Tax
In 2022, Mr Hunt increased the amount local councils can hike council tax without a local vote from 3 per cent to 5. In the year and three months since, 95 per cent of councils have indicated plans to increase council tax by this maximum amount.
Some have even committed to higher, with the government recently approving an appeal from Birmingham City Council to increase their council tax by 10 per cent.
Tax burden: raised
Corporation Tax
In his 2022 spring Budget, Mr Hunt increased Corporation Tax on companies with over £250,000 in profits from 19 per cent to 25. This brought the UK in line with other European countries like France, Spain and the Netherlands.
Tax also increased for companies with profits between £50,000 and £250,000, scaling between 19 per cent and 25.
In 2022, Mr Hunt also increased the windfall tax on profits of oil and gas firms from 25 per cent to 30, lasting until March 2028, as well as a new 45 per cent tax on energy company profits.
Tax burden: raised (but not for households)
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