There were very few winners from today’s Budget benefitting individuals.
Those who rely on the Universal Credit, should benefit from December from the reduction in the taper, but this is tempered by the Health and Social Care Levy (see below).
While there is some relief by the Government freezing both the fuel duty increase and alcohol duties, despite some the emphasis put on changes to the duties system on alcohol, these changes will not come until April 2023.
The biggest winners are probably investors, as there were no changes to Capital Gains Tax or Inheritance Tax, something which had been widely rumoured to be on the agenda. However, this is tempered by increase of 1.25% in dividends.
The Health and Social Care Levy – which will begin from April 2022 initially as an increase to National Insurance Contributions (NIC), but from April 2023 will be its own separate charge – will hit both the employed and self-employed and the very small increase in the National Insurance contributions (NIC) zero rate band will do little to alleviate this.
Even without the increase in the NIC rate, everyone will feel the pinch from April 2022. Almost all tax bands have been frozen, which will create a significant fiscal drag due to the ongoing inflation the Chancellor himself believes will be at 4% next year.
Tobacco rates and Vehicle Excise Duty (VED) for cars are also increasing, possibly to support the Government’s green credentials.
The biggest losers are probably yet to be announced as all the funding pledges and rates/duties cuts have questions left as to how they will be paid for in the future.
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