The Chancellor, Philip Hammond will deliver his maiden Autumn Statement on Wednesday against a backdrop of weaker growth prospects and a large deficit. The Institute of Fiscal Studies has recently revised one set of their figures and has suggested that post Brexit tax revenues will be £31bn lower than forecast in 2019/2020. The expectation is that further infrastructure projects will be announced in an attempt to stimulate growth and that there will be no balancing of the books; nonetheless there will be a continuing need to cut expenditure and increase revenue.
Historically, the Autumn Statement has not been used for announcing major changes to the tax rules, with such announcements being limited to blocking abusive tax schemes. Over recent years we have seen a gradual change, with the Autumn Statement becoming a more ‘political’ statement with sometimes quite detailed tax changes being announced.
It will be interesting to see what approach Philip Hammond takes. Few Chancellors, since the inception of the Statement in its current form in 1997, have had to make a Statement against such an uncertain backdrop.
It is understood that the Chancellor wants to bring forward the proposals to increase the tax free personal allowance from the current level of £11,000 to £12,500 and to increase the level of income at which the 40% tax rate becomes payable from £43,000 to £50,000. At a corporate level the planned fall in the rate of corporation tax to 17% in 2020 is likely to be confirmed with possibly further cuts announced.
The $64,000 question is where the cash is going to come from, we may know more on Wednesday.