Today I received a document regarding the Budget from my financial advisor.
This is some of the feedback.
“The first Budget from a Labour government since March 2010, and the first ever from a female Chancellor, proved to be the defining event that had been widely anticipated.
From the moment in late July when Rachel Reeves unveiled her “£22 billion black hole” and announced means-testing for the winter fuel payment, it was clear her Budget premiere would be a challenging one for both the government and the governed.
As Budget Day neared, talk of the black hole was replaced by a steady flow of rumours about tax increases and also, to a lesser extent spending cuts, totalling as much as £40 billion. In addition, there were suggestions that government borrowing – already overshooting the March 2024 Budget projections by around £7 billion – would rise by £20 billion to fund NHS and infrastructure projects.
In the event, the Chancellor delivered tax increases amounting to £41 billion by 2029/30. By far the largest element of this was the expected rise in employer’s national insurance contributions (NICs). The 1.2 percentage point rate increase, combined with a £4,100 cut in the secondary threshold will yield nearly £25 billion a year by 2028/29. At that level it more than counters the cost of the cuts to employee and self-employed NICs introduced by Jeremy Hunt.
Other significant tax increases included higher capital gains tax rates and a future reduction in inheritance tax business and agricultural reliefs. Despite the additional revenue, the Office for Budget Responsibility (OBR) projects that increased spending will mean that borrowing will still be over £70 billion in 2029/30. Not without reason does the OBR say, “…this Budget delivers a large, sustained increase in spending, taxation, and borrowing”
Budget highlights
The main rate of class 1 employer national insurance contributions (NICs) will be increased from 13.8% to 15.0% with effect from 6 April 2025 and the secondary threshold at which NICs are payable will be reduced from £9,100 to £5,000.
The main rates of capital gains tax will increase with immediate effect to 18% for non and basic rate taxpayers and 24% for higher and additional rate taxpayers. The rate for business asset disposal relief will rise to 14% for 2025/26 and 18% from 2026/27.
Inheritance tax (IHT) business and agricultural 100% reliefs will be capped at a combined total of £1 million from April 2026. Above that, the rate of tax relief will be 50%. However, the cap will not apply to AIM shares which will just qualify for 50% relief.
Unused pension funds and death benefits will form part of a person’s estate for IHT purposes from 6 April 2027.
The additional SDLT rate for second homes and buy-to-let properties increases from 3% to 5% from 31 October 2024. The temporary increases in the 0% SDLT band for first time and other property buyers will end on 31 March 2025.
VAT at 20% will be applied to private school education and boarding services from 1 January 2025. From 1 April 2025, charitable relief for business rates will be withdrawn.
Subscription limits for individual savings accounts (ISAs), Junior ISAs and Lifetime ISAs will be frozen until April 2030.”
From a previous posting in my blog, it just shows no one really saw what was coming in this budget and how can such a big black hole appear in the governments accounts, that should never happen, who is auditing them?
Overall I don’t see much of an impact on me apart from a rise in stuff to pay for the employer national insurance contributions increase, which I can only see will impact worker’s pay rises and taking on new staff. As is normal, it’s the general public that will suffer.
