Post Budget, where are we?
Well, I think it’s fair to say we are in a very tough spot.
Rachel Reeves has set out the largest tax rises Britain has seen in 30 years. Borrowing is up. Growth has been downgraded, inflation and interest rates will be higher, bond markets are pushing up the cost of capital.
Taken together the estimated impact is that an average family will be £770 worse off in 2029 compared to today (Joseph Roundtreee Foundation). The impact on businesses when you add in their Union workers package is incredibly tough.
The OBR have comprehensively rejected the made up £22bn ‘black hole’ figure that Labour have tried to hide behind.
The truth is, this is a traditional big tax and spend Labour budget - you can argue about the economic merits of that - but the key for me is that they have broken the promises they made over and over again to the electorate just weeks ago. Incidentally Labour also voted against being held accountable to their ‘£300 off energy bills by 2030’ election promise on Wednesday night.
The big measures that may affect you are:
- £25 billion increase to employer's National Insurance by raising the rate to 15% and lowering the thresholds to £5000 (75% of this will be passed on through lower wages, particularly hitting low paid workers).
- The minimum wage will rise to £12.20 from April and up to £10 for under 18s.
-Short term big boost to NHS spending (4.7% increase for two years) before falling back to lower levels.
-Stamp duty surcharge to go up from 3% to 5% and thresholds will drop from main home (from £250,000 to £125,000) and for first-time buyers pay the tax (from £425,000 to £300,000)
- Imposing an education tax by charging VAT on independent schools. A quarter of our student population in Surrey will be affected by this. SEND schools will not be exempt. I will write more about this.
- 20% inheritance tax on farms above £1m (this will be particularly bad for our farmers, I also worry the real plan is to squeeze them out and replace them with large scale solar farms which will impact our countryside).
- Cutting business rate reliefs for retail, hospitality, and leisure businesses from 75% to 40%.
- Basic rate capital gains tax on profits from selling shares to increase from from 10% to 18%, with the higher rate rising from 20% to 24%
