The Hunt For Tax Cuts - An Autumn Statement Preview

As sure as night follows day, so our industry sets out a wish list of tax changes which it hopes the Chancellor will agree with at his next Budget or Autumn Statement.

And so it is this time, with Jeremy Hunt’s statement expected on Wednesday and a raft of suggestions from agents, suppliers and trade bodies. But, for once, might at least some of the tax changes (code for tax reductions, of course) stand a chance of implementation?

Hunt - who, you will recall, was drafted in a year ago to rescue the Truss government from self-inflicted economic calamity - has succeeded in restoring financial credibility by restoring the two ‘golden rules’ of fiscal responsibility.

They are arcane, but here goes.

The first is that government debt should be falling as a proportion of GDP by the fifth year of the Office for Budget Responsibility’s forecast (in this case, 2027-28); and the second is that in such a forecast, government borrowing should not exceed 3.0 per cent of GDP in that fifth year. Hunt, it appears, is on target for both.

Indeed, the Office for Budget Responsibility says ‘fiscal headroom’ has grown to between £13 billion and £15 billion – opening the opportunity for more spending or tax cuts. With an election in the next 12 months or so, expect more tax cuts than new spending.

On top of all that, the most recent inflation figure of just 4.6 per cent shows the government has already met its year-end target of cutting the most popular measure of inflation to less than 5.0 per cent.

Thus (despite the best efforts of Suella Braverman) there is something approaching a feel-good factor as Hunt packs his papers into that historic red box.

So what can we expect as a property industry? Here’s my personal take on what will - and will not - be announced:

-   reduced stamp duty - unlikely (not when the housing market is surprisingly robust, some indices are actually pointing to stable or rising prices, and transactions are low but not catastrophic);

-   reinstatement of mortgage interest tax relief for investors - unlikely (not when there’s a cost of living crisis, the Renters Reform Bill is trundling through Parliament, and the mood music is not exactly in landlords’ favour?);

-   further mortgage assistance - unlikely (although one can imagine further help in this area would be electorally popular, the new mortgage guarantee scheme - which helps buyers with a five per cent deposit - is set to run into December, so any extension or new version of this would be a good vote-winner come the spring);

-   Capital Gains Tax changes - possible (the CGT allowance is due to be reduced from £6,000 to £3,000 in April 2024 so this could be delayed or scrapped, especially as the government wants to promote a pro-growth agenda amongst businesses - if it happens it would be one of the few pro-landlord policies by the government in recent years);

-    Help To Buy ISA limits upped - likely (the government could revise limits for the Help to buy ISA, designed for people saving to buy their first house. Currently it allows savers to earn a 25 per cent bonus on savings but the property prices are capped to £250,000 in England and £450,000 in London so these limits could well be increased);

-    un-freezing Local Housing Allowance - likely (this is MUCH more likely than the above tax concessions as it has been causing genuine hardship to tenants and landlords alike, plus Gove has lobbied Hunt in favour - the hitch for the government is that it’s not headline-grabbing, which is what they want…);

-   scrapping Inheritance Tax - highly likely (it appeals to Tory voters, costs little because it actually applies to only four per cent of estates, and it will create positive headlines in the government-supporting press).

There will be a bevy of other measures, too, not directly related to property and agents.

For example the Triple Lock will stay (upset older voters within a year of an election? you must be joking!); wider ISA shake-ups beyond those affecting home buyers; a populist clampdown on possible benefit abuse; boosting the minimum wage; and plenty more plus, of course, a rabbit or two from the hat to grab the headlines on the early evening news.

If you want to know whether my predictions are right, check out Estate Agent Today, Letting Agent Today and Landlord Today on Wednesday from around 12.30pm for live updates.