Today’s Autumn statement represents a £100billion swing from September’s tax cutting pledges says Nimesh Shah, CEO of leading tax and advisory firm, Blick Rothenberg.
Nimesh said, “Jeremy Hunt’s first Autumn Statement as Chancellor led with a series of measures of targeted support, with the objective to tackle record inflation and the threat of further interest rate hikes. The majority of the Treasury leaks prior to the Autumn Statement came to fruition, but the pre-Autumn Statement rumours of higher rates of capital gains tax, reforms to inheritance tax and abolishing the non-dom regime were not mentioned, and possibly saved for another day.
He added “The stamp duty cut from September’s ill-fated Mini Budget is confirmed to ‘sunset’ in April 2025, meaning that only the reversal of the 1.25% Health & Social Care Levy will be the lasting legacy from Kwasi Kwarteng’s and Liz Truss’ short time in Downing Street Today’s Autumn Statement represented a £100 billion swing from September’s tax cutting pledges, and firmly set the tone for the Sunak/Hunt regime (if it hadn’t been set already).
“Pensioners and those on lower incomes and receiving benefits were protected in the Autumn Statement measures; however, the “squeezed middle” will feel squeezed again. Other than the limited extension of the Energy Price Guarantee, the middle will feel short-changed by Jeremy Hunt.
He said “The extension of Rishi Sunak’s ‘big freeze’ of the personal tax allowances and thresholds to 2028, and reduction to the 45% income tax threshold to £125,140 continues to expose the middle to higher rates of taxation. The inheritance tax nil rate band of £325,000 will have been frozen for almost 20 years with the 2-year extension of the freeze.
“The reduction to the 45% income tax threshold is worth £1,243, and cuts to the dividend allowance to £500 and capital gains annual exemption to £3,000 from April 2024 adds another £3,200. The reduction to the additional rate threshold is partly offset by the 1.25% reversal to National Insurance, and someone earning £160,000 will be only £79 worse-off in 2023/24. But, when taking account of child benefit clawback, the tapering of the personal allowance at £100,000 and restrictions on tax relief for pension contributions, the “squeezed middle” are becoming the quickly forgotten.
Nimesh said “Businesses will also feel aggrieved, with only limited support coming in the form of freezing the business rates multiplier for a year, with further targeted relief for businesses operating in the retail, hospitality and leisure sectors. In response to recent press attention around abuse of the research and development tax credit regime, the relief is almost halved. Businesses will be nervous going into the crucial Christmas trading period and those with profits of more than £250,000 will be facing 25% corporation tax from next April. However, entrepreneurs will breathe another sigh of relief that capital gains tax remains at 20%, and it seems that this is now safe for the remainder of this Parliament.
“It felt like a well thought through series of measures, with targeted support at the right levels – the additional two weeks of preparation (and to avoid a Halloween fiscal statement) seems to be time well spent. The overall level of tax increases and severe impact of fiscal drag is adding to the highest tax burden in 50 years, and I would like to see a longer-term plan on how the Government plans to reduce taxes for individuals and businesses. As the next General Election inches closer, there has to be more to come from Jeremy Hunt and Rishi Sunak, and the story is far from over.”
Would you like to know more?
If you have any questions about the Government’s Autumn Budget and how it may impact you, please get in touch with your usual Blick Rothenberg contact or Nimesh or Genevieve using the details on this page. For any media enquiries, contact David Barzilay.
You can also visit our Budget Hub, where you can find our commentary and a range of insights to help you better understand how the Budget may affect you.