Chancellor ‘ready to target high earners’

Chancellor Jeremy Hunt will target the highest earners when he delivers his crucial autumn statement on Thursday, according to sources.

Hunt is expected to announce spending cuts and tax rises worth up to £60 billion after warning on Friday that the UK faces “a tough road ahead” as official figures showing a shrinking economy heading into a two-year recession.

He is likely to reduce the threshold at which people start paying the 45p rate of income tax from £150,000 to £125,000, a complete reversal of previous Chancellor Kwasi Kwarteng’s plan last month to ditch the 45p top rate of income tax.

Kwarteng and Liz Truss’s disastrous mini-budget caused the pound to collapse to a record low against the US dollar, soaring mortgage rates and a bailout of pension funds.

Hunt is expected to raise state pensions and benefits in line with inflation, which will cost £11 billion a year and mean tax rises and public spending cuts elsewhere.

Around £35 billion will be spending cuts and £25 billion higher taxation.

Hunt is also expected to announce that electric car owners will have to pay tax for the first time, plugging a fall in motoring tax revenues as more motorists switch to emission-free vehicles.

Hunt is also likely to slow increased spending in the NHS budget and introduce real-term cuts to school budgets, policing, transport and local government, which has been billed Austerity 2.0.

Former UK education secretary Kit Malthouse said cuts to education would be “unacceptable” and would disturb the “dynamic” of the post-Covid catch-up effort.

The SNP said that instead of spending cuts in public services billions could saved by extending the windfall tax on oil and gas profits to all large businesses who raked in big profits during the pandemic.

The party’s shadow chancellor Alison Thewliss also urged Britain to follow the United States and Canada in introducing a tax on share buybacks, which see companies buy back their own shares and increasing its value.

She also called for scrapping non-dom status, which Rishi Sunak’s wife has benefitted from, to raise billions of pounds.

The Treasury said: “Our priority is economic stability and restoring confidence that the UK is a country that pays its way.”