Inheritance tax and stamp duty could be cut in the Autumn Statement following positive projections about the state of public finances.
The cuts are being considered by Jeremy Hunt after he was told that he has more fiscal ‘headroom’ than expected.
Despite this, they may still end up being pushed back to the spring Budget if they are deemed unaffordable.
Jeremy Hunt has been assessing his options for the November 22 statement
Mr Hunt has been assessing his options for the November 22 statement after the Treasury’s independent fiscal watchdog, the Office for Budget Responsibility (OBR), said his ‘headroom’ had grown to between £13 billion and £15 billion.
He had previously ruled out personal tax cuts over fears that they would undermine efforts to bring down inflation.
However, Mr Hunt is under political pressure to give the Tories a way to bridge the poll gap with Labour following a series of by-election defeats.
Lower-than-expected growth projections have convinced the Chancellor that he must take action to stimulate the economy, the Sunday Times reported.
Cuts to inheritance tax and stamp duty are regarded as less inflationary because they do not involve directly pumping money into the system.
Reforms to inheritance tax could include reducing the headline 40 per cent rate, or simplifying the system to allow families to pass on £1 million tax-free.
Changes to stamp duty could include a rebate for buyers who improve the energy efficiency of their new home within two years.