This was a budget for jobs – Conservative Parliamentary jobs – and for some they already realise that it didn’t go far enough. But the facts are that the Chancellor has little opportunity to go further without grabbing the attention of the World as the Truss administration did so spectacularly. National Insurance changes are likely to fall more under the radar in this respect and 2% sounds an attractive UK headline, but is it really as good as it sounds?
The suggestion is that for some, because of the frozen personal allowance and reduction in the additional rate threshold, the saving turns into an additional cost which may prove upsetting on a youngster’s next birthday when their national minimum wage increase costs them money. However, I suspect they wouldn’t be voting for the Conservative Party in any case.
Removing the Non-Dom charge may well discourage people from working in the City which could prove detrimental to the country’s biggest profit centre in the medium term. That would be worrying but in the short term, stealing a proposed Labour policy is probably deemed acceptable.
Increasing the VAT threshold is long overdue, particularly after the recent inflation, but it seems to me that it remained at £85,000 for the introduction to income tax of Making Tax Digital. With the failure of the Government and HM Revenue & Customs to deliver on this project, many business owners have been forced to register who may not previously have done so – but we don’t discuss these failures as larger ones take the headlines.
Two positive measures were the increase in Child Benefit and reduction in higher rate capital gains tax on residential property sales. Child benefit limits have remained at £50,000 and £60,000 for some considerable time and with recent inflation uplifting wages, more is being returned. The idea of making this a “family earning” rather than the “major earner” seems a fairer and good way to go and the limits being increased to £60,000 and £80,000 are also sensible. Will this mean family earnings become £80,000 with immediate withdrawal in the future?
Similarly, if you sold a second property and paid capital gains tax that could be at two rates, 18% or 28%. The top rate has been reduced to 24% which will be welcomed by those making disposals. Will it be enough to encourage more to do so?
So, has the Chancellor done enough to keep his colleagues in a job? I suspect not but in this turbulent period of World history, anything is possible as last week’s by-election result showed. What looked like an easy win for Labour some months ago now looks more challenging with the Middle East threatening to destabilise their potential to field candidates opening the way for a very different political landscape to unfold in the Autumn.
If you have any questions or concerns around these announcements, please get in touch as usual.