A month after “Trussonomics”, the failed economic experiment by former UK Prime Minister Liz Truss, Chancellor Jeremy Hunt delivered the autumn budget at the House of Commons on Thursday.
“We are honest about the challenges and fair in our solutions. Yes, we take difficult decisions to tackle inflation and keep mortgage rises down. But our plan also leads to a shallower downturn; lower energy bills; higher long-term growth; and a stronger NHS and education system,” Jeremy Hunt said, acknowledging that in the face of “unprecedented global headwinds”, British people are worried about their future.
The Chancellor said that he will deliver a plan “to tackle the cost of living crisis and rebuild our [British] economy”.
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Jeremy Hunt announced that he is not going to change the remit of the Bank of England.
He told MPs: “So the Bank of England, which has done an outstanding job since its independence, now has my wholehearted support in its mission to defeat inflation and I today confirm we will not change its remit.”
Chancellor extends windfall tax
Turning to the windfall tax on energy giants, Jeremy Hunt said that he has “no objection to windfall taxes if they are genuinely about windfall profits caused by unexpected increases in energy prices”.
He continued: “But any such tax should be temporary, not deter investment and recognise the cyclical nature of many energy businesses.
“Taking account of this, I have decided that from January 1st until March 2028 we will increase the Energy Profits Levy from 25 per cent to 35 per cent.”
He also said that “from January 1st, we have also decided to introduce a new, temporary 45 per cent levy on electricity generators”.
The combined effect of these measures will bring in £14 billion, the Chancellor said.
Chancellor freezes tax allowances
Jeremy Hunt said he has decided to freeze a range of tax allowances to raise more cash for the Treasury.
He said: “We are also taking difficult decisions on tax-free allowances. I am maintaining at current levels the income tax personal allowance, higher rate threshold, main national insurance thresholds, and inheritance tax thresholds for a further two years taking us to April 2028. Even after that, we will still have the most generous set of tax-free allowances of any G7 country.”
The Chancellor also announced that he is “reforming allowances on unearned income”.
He said: “The dividend allowance will be cut from £2,000 to £1,000 next year and then to £500 from April 2024. The Annual Exempt Amount for capital gains tax will be cut from £12,300 to £6,000 next year and then to £3,000 from April 2024. These changes still leave us with more generous allowances overall than countries like Germany, Ireland, France, and Canada.”
Electric cars lose exemption from Vehicle Excise Duty
Jeremy Hunt said that he had decided “that from April 2025 electric vehicles will no longer be exempt from Vehicle Excise Duty”.
On housing, he said: “The OBR expects housing activity to slow over the next two years, so the stamp duty cuts announced in the mini-budget will remain in place but only until 31st March 2025.”
The inflation rate in the United Kingdom hit a fresh 41-year high in October, increasing to 11.1 per cent amid the cost of living crisis stoked by rising energy and food prices, in part due to the ongoing war in Ukraine. On an annual basis, food price inflation rose sharply to 16.5 per cent on an annual basis, the highest in 45 years, the UK Office of National Statistics said.
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For a household with average usage of both gas and electricity, the government in October had capped the bills at £2,500 per month. According to the UK’s Office of National Statistics, gas prices have climbed by nearly 130 per cent while electricity prices have risen by close to 66 per cent over the past year.
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