UK Chancellor Considers Inheritance Tax Cut and Stamp Duty Threshold Increase

Headroom for Tax Cuts

The UK Chancellor, Jeremy Hunt, is considering using around £15 billion of headroom to slash inheritance tax in the upcoming Autumn Statement. The proposal aims to reduce the current inheritance tax rate of 40% to 20%. Additionally, there are plans to raise Stamp Duty thresholds to stimulate the sluggish housing market.

Resistance to Personal Taxation Cuts

Despite mounting pressure, Chancellor Hunt is resisting calls to cut personal taxation on November 22. One of the main concerns is the potential impact on inflation. The Office for Budget Responsibility suggests that the existing headroom could be utilized to scale back other taxes instead.

Caution to Avoid Inflation

Addressing the issue, Chancellor Hunt stated, "I can rule out any tax cut that is going to fuel inflation." This cautious approach reflects the government's aim to maintain stable economic conditions.

Current Tax Rates

Inheritance tax is currently set at 40% for estates valued over £325,000 or over £1 million for couples leaving a family home. Stamp Duty rates are at 5% for properties exceeding £250,000, and this percentage increases to 10% for houses worth £925,000, and 12% for properties above £1.5 million.

Anticipated Changes

It is expected that the thresholds for Stamp Duty will be increased, providing relief to potential buyers. This adjustment aims to stimulate activity in the housing market.

Expanding Tax Relief for Businesses

As part of the Autumn Statement, Chancellor Hunt plans to allocate £10 billion to extend the existing "full expensing" tax relief for large businesses. This relief allows companies to offset their investments against corporation tax, resulting in a 25p tax saving for every £1 invested. While this measure is costly, it is a key policy supported by Prime Minister Rishi Sunak.