On Wednesday, Jeremy Hunt is set to announce a significant reduction in business taxes, marking it as the most substantial cut in the past fifty years. This move is part of his strategy to prioritize economic growth in his Autumn Statement.
The plan includes a permanent extension of the “full expensing” policy, which lets businesses deduct up to 25 pence for every pound invested. This policy was originally scheduled to conclude in March 2026.
There is anticipation around further tax cuts that the Chancellor might reveal, particularly in personal taxes. Expectations include a reduction in National Insurance, benefiting around 28 million individuals, and potential income tax cuts are also under consideration.
Hunt will highlight that the economy is on an upward trajectory, with inflation having reduced by half this year. In his statement, he is expected to emphasize the Conservative Party’s shift away from high government spending and taxation. Instead, the focus will be on supporting British businesses through 110 growth initiatives.
These initiatives aim to simplify planning processes, improve National Grid access, assist entrepreneurs, promote rapidly expanding industries, attract foreign investment, enhance productivity, reform welfare, and equalize opportunities across the UK, along with lowering business taxes.
The upcoming speech will signify a notable shift in Rishi Sunak’s economic strategy as Prime Minister, moving from focusing on controlling inflation to stimulating the currently sluggish economic growth.
This shift is also seen as an effort to improve the Conservative Party’s political standing, as they are currently trailing Labour by approximately 20 points in the polls. Despite Sunak’s recent attempts to rejuvenate his leadership, this remains a challenge. The forthcoming announcement, scheduled for around 12.45 pm in the House of Commons, might be one of the final fiscal presentations before the expected general election next autumn.
Key elements of the announcement include stricter conditions for claiming sickness benefits without seeking employment, public spending control, and pension reforms. Under Hunt’s plans, the National Living Wage is set to rise by over a pound to £11.44 per hour from next April, benefiting nearly three million of the lowest-paid workers.
However, the attention of many voters and Conservative MPs will be on the tax cuts that Hunt and Sunak opt for, especially given their recent commitments to reducing taxes.
The move to extend “full expensing,” a scheme allowing companies to reclaim investments made in the UK, is projected to cost about £10 billion annually. Initially introduced in the spring and due to end in March 2026, The Telegraph reports that Hunt plans to make this scheme permanent. This is being touted as the most significant business tax reduction in modern times, based on Treasury records dating back to 1970.
While some experts from think tanks have debated the cost-effectiveness of this move, considering the potential growth it could stimulate, the discussion is expected to continue in the upcoming days.
Businesses have also been advocating for an extension of a business rates reduction, which is set to end next spring. The government’s recent discussions about tax cuts have raised hopes in this area.
Hunt will emphasize in his speech: “After a global pandemic and energy crisis, we have taken difficult decisions to put our economy back on track. We have supported families with rising bills, cut borrowing and halved inflation. The economy has grown. Real incomes have risen. Our plan for the British economy is working. But the work is not done. Conservatives know that a dynamic economy relies less on ministerial decisions and directives and more on the energy and enterprise of the British people.”
