Many people are not expected to benefit from the proposals that the Chancellor, Jeremy Hunt, will announce today; most of us will probably be worse off as a result of his tax hikes and spending cuts. Nevertheless, as he speaks, here we list the winners and losers of the fall statement.
winners
Retirees and benefit recipients
It is expected that Mr. Hunt will confirm that the pension triple lock will continue to exist, as a result of which state pension benefits will increase in line with inflation. He is also expected to raise state benefits in line with inflation.
The Chancellor is also likely to announce further help with energy bills for pensioners and benefit recipients after the current support scheme expires in April.
losers
High earners
The threshold for paying the top rate of 45p income tax is expected to be lowered from £150,000 to £125,000.
Taxpayers
It is widely expected that the government will extend the freeze on income tax and national insurance thresholds – currently frozen until 2025-2026 – for another two years or possibly longer.
Relative families
The same probably applies to inheritance tax. The “zero-rate band” – the amount that can be passed before IHT is due at a rate of 40 percent. – has been frozen at £325,000 since 2009. The Prime Minister froze the IHT threshold until 2025-26 when he was chancellor and Mr Hunt is now expected to extend the freeze for another two years.
Retirement savers
Wealthier pension savers are also expected to be hit by an extension of the lifetime benefit freeze, which will be set at £1,073 million rather than rising in line with inflation.
Just over a million people were at risk of exceeding the supplement before the freeze, according to pension consultancy LCP. The first five-year freeze put an additional 500,000 savers at risk of breaking it, and a two-year extension will now bring the total to two million.
Investors
The Chancellor is considering an increase in the nominal rate of capital gains tax and taxes on dividends. Mr Hunt is examining changes to the nominal rate, exemptions and surcharges on CGT, while also considering hitting savers with a dividend tax increase. Officials are also working on a possible £2,000 tax-free dividend cut.
Municipal taxpayers
The chancellor is also drafting plans to allow town halls to raise council tax by 5 percent without holding a local referendum.
Under the current rules, municipalities responsible for social care may reduce the tax by 2.99 pc. to increase. This includes an allocation of 1 pc for social care expenditures. If a government wants to raise taxes further, it must hold a referendum.
However, the new plans would allow municipalities to increase the tax by 4.99 percent without a vote.