Biggest tax cut for businesses in 50 years in Autumn Statement

Jeremy Hunt prepares his Autumn Statement
Jeremy Hunt prepares his Autumn Statement, which is expected to focus on tax cuts and growth - N10-5152

Jeremy Hunt will unveil the biggest business tax cut in half a century on Wednesday as he puts boosting economic growth at the heart of his Autumn Statement.

The Chancellor will permanently extend “full expensing”, which allows companies to claim back up to 25p for every pound invested and which had been due to end in March 2026.

The Treasury was on Tuesday night closely guarding which personal tax cuts would be unveiled in the statement. National Insurance is expected to be cut, in what would be a boost to 28 million people, with income tax reductions also being explored.

As he argues that the economy has turned a corner now that inflation has halved this year, the Chancellor will say: “In today’s Autumn Statement for growth, the Conservatives will reject big government, high spending and high tax because we know that leads to less growth, not more.

“Instead, we will back British business with 110 growth measures to remove planning red tape, speed up access to the National Grid, support entrepreneurs raising capital, get behind our fastest-growing industries, unlock foreign direct investment, boost productivity, reform welfare, level up opportunity to every corner of the country and cut business taxes.”

The speech will mark a significant pivot in economic approach in Rishi Sunak’s premiership, with the focus moving from controlling price rises to jump-starting stuttering growth.

It is also an attempt to revive the Conservative Party’s political fortunes, with Labour still around 20 percentage points ahead in the polls despite a series of recent efforts by the Prime Minister to reboot his premiership.

The package, which will be delivered to the House of Commons at about 12.45pm, could be the second-last set of tax and spending announcements before the general election, which is expected next autumn.

A welfare shake-up that makes it harder to claim sickness benefits while not looking for work, public spending restraint and pensions reforms will all feature. The National Living Wage is to increase by more than a pound to £11.44 per hour from next April under Mr Hunt’s plans, giving a boost to almost three million of the poorest workers.

But many voters and Tory MPs are expected to be watching which taxes Mr Hunt and Mr Sunak choose to cut after both men vowed to do so in recent days.

Move will cost £10bn a year

Full expensing, a scheme that allows companies to claim back money invested in the UK, such as in factories or equipment, was unveiled in the spring and was due to end March 2026.

The Telegraph reported this month that Mr Hunt was determined to expand the scheme and now understands it will be made permanent on Wednesday. It will cost about £10 billion a year.

Mr Hunt will celebrate the move as the biggest business tax cut in modern history, a claim based on analysis of a Treasury database dating back to 1970.

Think-tank experts have previously questioned whether the move would end up costing less if the boost to growth was factored in – a debate likely to play out in the coming days.

Companies have also been pushing for an expansion of a business rates cut that ends next spring, with the Government’s talk of tax cuts in recent days raising hopes.

Mr Hunt will say: “After a global pandemic and energy crisis, we have taken difficult decisions to put our economy back on track. We have supported families with rising bills, cut borrowing and halved inflation.

“The economy has grown. Real incomes have risen. Our plan for the British economy is working. But the work is not done. Conservatives know that a dynamic economy depends less on the decisions and diktats of ministers than on the energy and enterprise of the British people.”

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