An underwhelming Budget
It was a Budget about managing the rising costs of living, under the threat of interest rate increases, and more infrastructure investment for the economy. Despite yesterday’s speech practice, it was an underwhelming Autumn Budget statement from the Chancellor, Rishi Sunak.
The Government had tactically already announced the Health and Social Care Levy last month – alongside the March Budget announcement to freeze personal allowances for the next 5 years, working families will be worse-off from next April. A family of four with one working parent earning £62,000 will be £649 worse-off per annum in 2022/23 than 2010/11 with changes to rates, allowances, and thresholds.
There was some limited respite for families – freezing of fuel duty, an increase to the National Living Wage to £9.50 and a change to the mechanism for tapering universal credit, but it doesn’t go far enough, especially with a 1.25% increase to National Insurance coming next April.
There was some relief for businesses – an extension of the annual investment allowance, which has become customary practice, a broadening of qualifying expenditure for research and development (R&D) tax relief and a business rates discount for businesses in the tourism, hospitality and leisure sector.
The time the Chancellor spent talking about niche taxes during his speech highlighted that he had run out of things to talk about – reform to tonnage tax, air passenger duty and alcohol duty have never had so much attention, yet no mention of Income Tax, National Insurance and VAT (the big three tax revenue raisers).
Rishi Sunak wants to be a Chancellor that reduces taxes, but we have heard that before, and the Chancellor has not hidden his desire for fiscal responsibility against the backdrop of the £300 billion cost of the pandemic and £2 trillion of national debt. The next Budget will be critical and the Chancellor may finally deliver on an increase to capital gains tax, a reform of inheritance tax and revisit the report on a new wealth tax.
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