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5 things on Jeremy Hunt’s 'budget list' that could impact your finances

Budget  Chancellor of the Exchequer Jeremy Hunt speaking at the Resolution Foundation conference at the QEII Centre in central London. Picture date: Monday December 4, 2023. (Photo by Maja Smiejkowska/PA Images via Getty Images)
We can’t know exactly what chancellor has in mind until the Budget is announced, but there are some strong contenders, which could have a significant impact on your finances. (Maja Smiejkowska - PA Images via Getty Images)

Budget speculation has been simmering for a couple of months now, during which time we’ve had numerous fires lit under various rumours and then buckets of cold water immediately poured over them.

We can’t know exactly what chancellor Jeremy Hunt has in mind until the speech on Wednesday, 6 March. However, we have some strong contenders, all of which could have a significant impact on your finances.

A national insurance or income tax cut

Talk of big tax cuts has made way for speculation over something a bit more modest — like a 1p cut in either national insurance (NI) or income tax.

NI is the cheaper option, but apparently polling has revealed that people don’t really understand this tax — and some are (wrongly) worried that a cut might impact their ability to claim a state pension.

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Read more: The tax cuts that could offer a lifeline to cash-strapped UK families

It means the government may bite the bullet and opt for a more expensive income tax cut on the grounds it’ll go down better with voters.

Fuel duty cut

This has to be a major consideration because we’ve got so used to annual rises in fuel duty being frozen that if a rise goes ahead drivers will be hugely unimpressed.

To make life even harder for Hunt, we’re also about to see the end of a 5p fuel duty cut that was meant to be temporary. If he lets this spring back up after the temporary cut expires, it’s going to leave a large number of voters out of pocket. He may have no choice but to keep the temporary cut and axe the rise in petrol prices.

Tweaking of tax thresholds

Many would like to see a widespread unfreezing of tax thresholds, which have been pushing us into paying much more tax in recent years.

This is likely to be considered as too expensive for the government. Instead, they may tweak how taxes change when they reach one of these thresholds, so it’s less of a cliff edge.

Read more: What is non-dom status and why could it be scrapped?

One of the thresholds that has already hit the headlines as a potential candidate for change is when a parent earns more than £50,000, and has to start repaying child benefit. We could well see a tweak to the way this rule works.

A change to lifetime ISAs

There have been reports that Hunt is considering changing the rules if you use money in a lifetime ISA (LISA) to buy a property worth more than the maximum limit — which at the moment is £450,000. Under the existing rules, you pay an early access penalty of 25% — which doesn’t just mean paying back the government bonus, but losing some of your own money too.

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It’s thought that Hunt might cut the penalty in these circumstances to 20% — which means you just lose the bonus.

He’s also said to be considering raising this £450,000 limit. It’s a step in the right direction, but many people want to see the penalty cut to 20% for anyone who needs to access the cash outside the rules — including those who dip in for emergencies.

A stamp duty cut

This isn’t straightforward, because we’re in the middle of a temporary stamp duty holiday, so either Hunt makes it permanent — which will just mean we’re no worse off — or he introduces something more dramatic, which would be expensive.

Rather than a blanket cut, he may be tempted to use changes to target particular groups – whether that’s first-time buyers or downsizers. However, at the moment, this appears more of an outside chance than a dead cert.

Watch: Tory One Nation group urges Jeremy Hunt to cut taxes for workers in budget

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