Category: Personal Tax

Autumn Budget 2024

With the UK tax burden already at an all-time high, it’s safe to say that the Rt Hon Rachel Reeves didn’t have any tax giveaways tucked up her sleeve this Autumn Budget. Instead Reeves, the first woman to hold the position of chancellor in the 800-year history of the post, kept a steady drumbeat on the dire state of public finances and the £22 billion ‘black hole’, a familiar tune that set the stage for tax increases worth an estimated £40 billion. The message was clear: buckle up, because “necessary investment” has a price tag, and taxpayers are footing the bill.

Throughout her speech, Reeves pointed to soaring costs in public services, underscoring the need for additional tax increases. These, she assured, were “small asks” in the grand scheme of revitalising everything from potholes to the NHS- though businesses and investors might see it a little differently. The 10-year gilt yield climbed to 4.37 per cent from a low of 4.21 per cent during Reeves’ speech.

Income Tax thresholds will remain frozen until April 2028 as per the government’s “let’s do less with more” strategy, with Reeves insisting this would contribute to “stability.” Meanwhile, employers’ National Insurance, Capital Gains Tax and Inheritance Tax changes mean making friends with even higher deductions.

Finally, on the housing front, the government has decided that buying a second property should be even more of a luxury, hiking the Stamp Duty Land Tax on additional dwellings from 3% to 5% starting 31 October 2024.

So, in case you were holding out for a pleasant surprise this budget season… consider yourself surprised. We’ll be here to help you navigate the fine print and any implications these changes may bring.

The highlights are as follows:

Personal tax

• As promised in the Labour manifesto, no changes were announced to the rates of Income Tax. In addition, the government will not extend the freeze to income tax thresholds. From April 2028, these personal tax thresholds will be uprated in line with inflation.
• The government will increase the Lower Earnings Limit and the Small Profits Threshold for National Insurance contributions (NICs) by 1.7% for 2025/26 to £6,500 and £6,845 per annum respectively. For those paying voluntarily, the government will also increase Class 2 and Class 3 NICs rates by 1.7% for 2025/26. The main Class 2 rate will be £3.50 per week and the Class 3 rate will be £17.75 per week.
• The government confirmed that the non-domicile regime will be abolished from 6 April 2025. Individuals who opt-in to the new residence-based regime will not pay UK tax on foreign income and gains for the first four years of tax residence. As part of the transition the Temporary Repatriation Facility will be extended to three years.
• The government will not proceed with the reform to base the High Income Child Benefit Charge on household incomes as proposed by the previous government.

Capital Gains Tax (CGT)

• The lower rate of CGT will be increased from 10% to 18% and the higher rate from 20% to 24% for disposals of non-residential assets made on or after 30 October 2024. The rates on residential property will be maintained at 18% and 24%, being the new harmonised rates.
• The rate of CGT on assets qualifying for Business Asset Disposal Relief and Investors’ Relief will rise gradually to 14% from 6 April 2025 and to 18% from 6 April 2026.
• The CGT rates currently applied to carried interest will be increased to 32% from April 2025 and carried interest will be taxed fully within the Income Tax framework from April 2026.

Inheritance Tax (IHT)

• The Nil Rate Band and Residence Nil Rate Band for IHT are currently frozen at £325,000 and £175,000 respectively until April 2028. The government is extending these threshold freezes for a further two years to April 2030.
• The government will bring unused pension funds and death benefits payable from a pension into a person’s estate for inheritance tax purposes from 6 April 2027. The fine detail is yet to be announced.
• Agricultural Property Relief (APR) and Business Property Relief (BPR) will be reformed. From April 2026, the first £1 million of combined eligible agricultural and business assets attract 100% relief. The rate of relief on excess assets will be 50%. The government will also reduce the rate of BPR to 50% for shares designated as ‘not listed’ on the markets of a recognised stock exchange, such as AIM.
• From 6 April 2025 the government will introduce a new residence based system for IHT, ending the use of offshore trusts to shelter assets from IHT. Again the fine detail is yet to be announced.

Employment

• From 6 April 2025 the rate of employers’ NICs will be increased by 1.2% to 15%. The per‑employee threshold at which employers start to pay NICs will be reduced from £9,100 per year to £5,000 per year. That’s an increased cost of £866 per annum for an employee earning £30,000, although…
• The Employment Allowance currently allows businesses with employer NICs bills of £100,000 or less in the previous tax year to deduct £5,000 from their employer NICs bill. The amount of the Employment Allowance will be increased from £5,000 to £10,500 and the £100,000 threshold for eligibility will be removed. In addition, the government is extending the employer NICs relief for employers hiring qualifying veterans for a further year from 6 April 2025 until 5 April 2026.
• The percentages for company car benefits will be increased for 2028/29 and 2029/30 as follows:
  • Increase of 2% per year for zero emission and electric vehicles.
  • Increase to 18% in 2028/29 and 19% in 2029/30 for cars with emissions of 1-50g of CO2 per kilometre.
  • Increase of 1% per year for all other vehicle bands.
  • The maximum will also increase to 38% in 2028/29 and 39% in 2029/30.
• The government will uprate the Van Benefit Charge and Car and Van Fuel Benefit Charges by CPI from 6 April 2025.
• From April 2026, to tackle the significant levels of tax avoidance and fraud in the umbrella company market, the government will make recruitment agencies responsible for accounting for Pay As You Earn on payments made to workers that are supplied via umbrella companies. Where there is no agency, this responsibility will fall to the end client business.
• From April 2025 the National Living Wage will increase to £12.21 per hour for all eligible employees. The National Minimum Wage for 18-20 year olds will increase to £10.00 per hour for all eligible workers, as part of a long-term plan to move towards a “single adult rate”.

Business

• The government will extend the 100% First Year Allowances (FYA) for qualifying expenditure on zero-emission cars and the 100% FYA for qualifying expenditure on plant or machinery for electric vehicle charge points for a further year to 31 March 2026 for Corporation Tax purposes and 5 April 2026 for Income Tax purposes.
• The government has published a Corporate Tax Roadmap. The Roadmap includes a commitment to cap the Corporation Tax Rate at 25%, maintain the Small Profits Rate and marginal relief at current rates and thresholds and maintain key features such as Full Expensing, the Annual Investment Allowance, R&D relief rates and the Patent Box.
• For 2025/26, eligible retail, hospitality and leisure properties in England will receive 40% relief on their business rates liability. The small business multiplier will be frozen for 2025/26.
• The rate of the Energy Profits Levy will be increased by 3% to 38% from 1 November 2024. The levy will continue to apply until 31 March 2030.

Other matters

• The higher rates of Stamp Duty Land Tax for purchases of additional dwellings will be increased from 3% to 5% from 31 October 2024.
• As previously announced, all education services and vocational training provided by a private school in the UK for a charge will be subject to VAT at the standard rate of 20% from 1 January 2025. This will also apply to boarding services provided by private schools. In addition, it is intended that private schools in England will no longer be eligible for charitable rate relief from business rates from April 2025.
• Air Passenger Duty to go up in 2026, by £2 for short-haul economy flights and £12 for long-haul ones, with rates for private jets to go up by 50%.
• Vehicle Excise Duty paid by owners of all but the most efficient new petrol cars to double in their first year, to encourage shift to electric vehicles.
• Day-to-day spending on NHS and education in England to rise by 4.7% in real terms this year, before smaller rises next year.
• Reeves confirmed that the government’s new investment rule would define debt as “public sector net financial liabilities”, in a move that will increase scope for borrowing.
• From 6 April 2025, the government will increase the late payment interest rate charged by HMRC on unpaid tax liabilities by 1.5%.
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Visit our Budget Highlights and tax data for a summary of the Autumn Budget 2024.

Contact Mouktaris & Co Chartered Accountants for expert advice or click here to subscribe to our Newsletter.

Spring Budget 2024

The Chancellor managed to find some optimism in the deteriorating economic forecasts, as most Chancellors, of whatever political hue, seem to do before an election. Mr Hunt announced a further 2% cut to national insurance, although it appears that the current budget deficit and the anticipated fall in inflation to 2% did not arrive in time to arm the Chancellor with the fireworks needed to queue an election. With this in mind, the Autumn Statement 2024 is now likely to be the “main event”, if we may, for the Conservatives to bring in a final raft of measures, including perhaps Mr Sunak’s long-forgotten “promise” to slash the basic rate of income tax from 20p to 19p by 2024.

Indeed the speech from Mr Hunt did not feel like a genuine election push; he rather serenaded the opposition and there was an absence of an impassioned pre-election tone. The Conservatives have accepted this election will go very late, or perhaps they have accepted that they will go down with dignity (and cheques that will bounce back).

Whereas in years gone by ministers responsible for leaks to the press resigned on the spot, party politicians have warmly embraced the new age of “populism” and the Budget was leaked, in drips and drabs over the course of the past few days, to various news organisations.

Headlines and commentary as follows…

Spring Budget 2024

Personal taxes

• Tax Rules for non-UK domiciled individuals – from‌‌‌ 6‌‌‌‌‌‌ April‌‌‌ 2025, the current remittance basis of taxation will be abolished for UK resident non-domiciled individuals. This will be replaced from 6‌‌‌ ‌‌April 2025 with an elective 4-year foreign income and gains (FIG) regime for individuals who become a UK tax resident after a period of 10 years of non-UK tax residence. There will also be transitional provisions for non-doms currently paying tax on the remittance basis, including a 12% tax rate on foreign income arising before April 2025 but brought into the UK in the tax years 2025/26 or 2026/27. Do the Conservatives now feel that the abolition of these breaks will not result in a mass exodus? In practice, looking at the polls and the fairly imminent election, this particular measure won’t be in place before there is a change in government and any actual amendments to the regime are likely to be quite different.
• High Income Child Benefit Charge (HICBC) – the HICBC income threshold will be raised from £50,000 to £60,000 from 6‌‌‌ April‌‌‌ 2024, and the taper will be extended up to £80,000. A migration to a system based on household rather than individual income is planned by April‌‌‌ 2026.
• ISAs – introduction of a UK ISA with a new £5,000 allowance, in addition to the existing ISA allowance.

National Insurance contributions – whilst any “tax” cut is welcome, one must recall that the same percentage increase was levied by the same party in order to fund “social care”. Have then, the problems of social care been solved? Or do they no longer matter? The state of our public services will quite possibly be the biggest challenge of the next elected party.

• Class 1 – a cut to the main rate of Class 1 employee NICs from 10% to 8% from‌‌‌ ‌‌6‌‌‌ ‌‌April 2024.
• Class 2 & 4 NICs – a further cut of 2 pence to the main rate of Class 4 self-employed NICs from 6‌‌‌ April‌‌‌ 2024, taking this to 6% of profits. The consultation to abolish Class 2 NICs to continue.

Property

• Capital Gains Tax (CGT) – a reduction to the higher CGT rate for residential property disposals from 28% to 24%. The change will take effect for disposals that take place on or after 6‌‌‌ April 2024. The lower rate of 18% will remain unchanged. For those with second homes, perhaps a “softener” to finance the VAT to be paid on school fees after the election?
• Furnished Holiday Lettings (FHL) – Were the tax breaks really responsible for exacerbating housing pressures of tourist areas to the detriment of local residents (many of whom also happen to be voters in marginal seats)? Draft legislation to be published in due course, but from April 2025, the generous tax advantages afforded to FHLs operating as either individuals or corporates will be abolished.

Excise and Duties

• VAT
  • The VAT threshold will increase to £90,000 from 1‌‌‌ April‌‌‌ 2024, and the level at which a business can apply for de-registration will increase from £83,000 up to £88,000. It is good to see the VAT threshold increasing, but we can’t help but ask Mr Hunt: why not go big and move the threshold to say £100,000? We feel that this would move the stifling cliff edge quite some distance for smaller traders; plus, a higher threshold could have taken out a large swath of businesses and reduced demand on HMRC, who are clearly struggling to perform.
  • Also, the VAT implications for the private hire vehicle sector will be examined in April 2024, with potentially full expensing to give 100% corporation deductions for qualifying capital expenditure.
• Stamp Duty Land Tax (SDLT)
  • First Time Buyers’ Relief will be extended to individuals who use nominee and bare trust arrangements when buying a new lease over a dwelling that they intend to use as their main or only residence.
  • Abolition of Multiple Dwellings Relief, a bulk purchase relief within the SDLT rules available on the purchase of two or more dwellings.
• Vaping Duty – a new duty on vaping products will be introduced in October 2026, details on the design and implementation to be announced.

Business taxes

• Energy Profits Levy – the “temporary” tax on oil & gas profits introduced in 2022 has been extended to 1 March 2029. However, alongside this extension is a separate measure which will switch off this tax automatically if the average price for both oil & gas drops below certain thresholds.
• Creative Industries – New permanent rates of relief (40% and 45%) for theatre, orchestra and museums and galleries exhibition tax, and additional support for independent film through a new UK Independent Film Tax Credit at a rate of 53% for films with budgets under £15 million that meet the conditions of a new British Film Institute test. Plus, a 5% increase in tax relief for UK visual effects costs in film and high-end TV, under the Audio-Visual Expenditure Credit (AVEC).
• R&D – an expert advisory panel to support the administration of research and development (R&D) tax reliefs.

Tax administration

• Cryptoasset Reporting Framework (CARF) – the government has launched a consultation to seek views on how best to implement the Cryptoasset Reporting Framework and Amendments to the Common Reporting Standard.

Visit our Budget Highlights and tax data for a summary of the Spring Statement 2024.

Contact Mouktaris & Co Chartered Accountants for expert advice or click here to subscribe to our Newsletter.

What is a Benefit in Kind?

Benefits in kind (BIKs) are benefits that employees or directors receive from their employer which aren’t included in their salary or wages. BIKs are popular elements of many people’s salary packages and can be used by an employer to structure an effective and tax-efficient salary package.

Some BIKs aren’t taxed, but most are. As well as the impact on an employee’s personal tax, national insurance contributions are payable by companies, such that the tax treatment is broadly similar to that when paying a salary (although employer pension contributions are not due on BIKs).

What is Payrolling Benefits?

We are encouraging employers to take advantage of using payroll facilities for the purpose of reporting expenses and benefits. Rather than filing an annual P11D, an employer can report and deduct tax on the value of benefits provided to an employee each pay period though PAYE. This means doing away with the end of year P11D process, as taxes are submitted in real time.

HMRC will issue an employee with a new tax code to automatically account for the benefit provided and charge the correct amount of tax, in real time.

An employer will still need to complete and submit a P11D(b) form and pay Class 1A National Insurance on the value of the benefit provided to employees.

Employer Duties

Once an employer has registered to payroll benefits, they must give employees written notice explaining which benefits will be payrolled, the cash equivalent of the benefits, and details of benefits that will not be payrolled. Details on communicating with existing and new employees are set out on gov.uk.

Working out the taxable amount of a benefit in kind

The taxable amount of the benefit is the same as its cash value. This is then divided by the number of paydays the employee has in each pay period, so that tax is applied appropriately.

What if the value of the benefit changes?

It’s fairly common for benefits such as gym memberships and car costs to change during the year. If this happens, it’s simple to process the change. You must however ensure to keep us updated with changes when you communicate with us in the normal course of operating payroll. Examples of changes to the value of the benefit provided to the employee include:

• a change in price of the benefit, such as an increase in insurance premium
• a change in the number of days worked by the employee, including if an employee leaves

We recommend you discuss any benefit you plan to offer your company’s directors and employees with one of our expert accountants. As you can see, the rules around benefits in kind are complex and each example needs to be looked at based on its individual circumstances to see if any tax is payable by the employee and/or your company.

Contact Mouktaris & Co Chartered Accountants for expert advice or click here to subscribe to our Newsletter.

ATED Update

Certain companies owning UK residential property need to submit an Annual Tax on Enveloped Dwellings (ATED) return every year. ATED is payable by companies that own properties valued at more than £500,000 if none of the various reliefs apply.

Valuation dates and the 2023-24 ATED return

Valuation dates are relevant for determining a company’s ATED position. It is the value of the property on the most recent of these valuation dates which is relevant for determining the annual chargeable amount due on the property. The previous “valuation date” was 1 April 2017, which applied for the 2018-19 ATED year and all ATED years up to and including this 2022-23 ATED year.

For the forthcoming ATED year 2023-24 and all ATED years up to and including the 2027-28 ATED year, ATED charges will be rebased to 1 April 2022 property values and so a revaluation of properties will be required as at 1 April 2022. ATED Returns are due within 30 days of the start of the relevant chargeable period i.e. by 30 April 2023 for the 2023/24 period.

Property Valuation

If a revaluation has not been carried out on properties, directors should consider doing so as a matter of urgency to ensure that future ATED liabilities are based on the correct valuation. This is especially important if the property is valued close to the ATED bands detailed below. Even if the company’s property is currently relieved from ATED, it would be prudent to have a 1 April 2022 valuation should circumstances change.

Property values were particularly volatile post-Brexit and there were instances where values actually fell when the April 2017 revaluation exercise was undertaken. Given the effects of the coronavirus pandemic on property values, similar considerations may apply when the 2022 valuation exercise is undertaken, although different considerations will apply to different regions and properties.

Directors can ascertain the property value or a professional valuer can be used. Valuations must be on an open-market willing buyer, willing seller basis and be a specific amount.

ATED Annual Chargeable Amounts

Annual chargeable amounts can be found on gov.uk.

Pre-return banding check

If your property falls within 10% of the above value bands and you can’t take advantage of a relief to reduce your ATED charge to nil, we can ask HMRC for a pre-return banding check (PRBC) in advance of submitting your return. If HMRC complete your PRBC after you’ve submitted your return and they don’t agree with your valuation, you’ll need to complete an amended return.

Contact Mouktaris & Co Chartered Accountants for expert advice or click here to subscribe to our Newsletter.

Back to the Future

Following the “Growth Plan” mini budget delivered by Kwasi Kwarteng on 23 September 2022, Jeremy Hunt took centre stage for the second time on 15 March 2023 to deliver a…”Budget for Growth”.

Fiscal policy can be assessed in three measures: efficiency, effectiveness and equity and whilst the announcements were fairly safe, a handful are poorly timed or likely to be ineffective:

• During an interview with BBC Radio 4 when defending the scrapping of the £1.073m tax-free cap on the lifetime pension allowance, Jeremy Hunt remarked that “we do know that we have a shortage of doctors and we know we have a very big backlog, and that is why we’ve decided this [scrapping of the lifetime pension allowance] is a very important measure to get the NHS working”. Said whilst junior doctors are on prolonged strike over pay and conditions; we suspect that Mr Hunt may have skipped his situational judgement module at Oxford!
• The Spring Budget is designed to “…break down barriers to work, unshackle business investment and tackle labour shortages head on”. Whilst the headline measure of 30 hours of weekly free childcare is a great and targeted initiative, Mr Hunt is making some parents wait up to 2 years and 5 months for the benefit.

As regards equity, the Budget is fairly safe and business-focused, but it does not appeal particularly to small and medium-sized enterprises (SMEs) who now face a rise in corporation tax and who are unlikely to benefit from the full expensing capital allowances policy. In addition the chancellor has failed to take any action to make it easier for small firms to recruit people locked out of the labour market.

In other news regarding:

• Childcare: Extension of 30 hours of weekly free childcare to cover nine-month to two-year-olds for working parents, to be fully phased in by September 2025.
• Taxes: Increase in corporation tax from 19% to 25%.
• Capital allowances: A “full expensing capital allowances policy” under which companies can write off qualifying expenditures against taxable profits.
• Research & Development: From 1 April 2023:
  SMEs will received an increased rate of R&D relief from HMRC: £27 for every £100 of R&D investment if they spend 40% or more of their total expenditure on R&D.
  the rate of the Research & Development Expenditure Credit (RDEC) is increased from 13% to 20%.
• Energy: The government will keep the £2,500 annual cap on household energy bills in place for a further three months until June. Fuel duty has also been frozen for another year.
• Local growth: Tax incentives and other benefits for 12 investment zones across UK cities and towns worth £80m each over five years.
• Pensions:
  • The annual tax-free pension allowance will be increased from £40,000 to £60,000.
  • The Lifetime Allowance – previously set at £1.07m – will be abolished. The 25 per cent tax-free lump sump will though remain pegged to the current lifetime allowance, rather than 25 per cent of your whole pot.
  • The money purchase annual allowance (MPAA) currently capped at £4,000 or £3,600 per tax year, has been increased to £10,000.
• Energy: Investment of £20bn over the next 20 years in carbon capture and storage projects.
• Pubs: A pint will become 11p cheaper but a glass of wine will cost 45p more from August.

Visit our Budget Highlights and tax data for a summary of the Spring Statement 2023.

Contact Mouktaris & Co Chartered Accountants for expert advice or click here to subscribe to our Newsletter.

Taxing Times

In the latest decisive swoop of indecisiveness, Jeremy Hunt performed a 180 degree turn from the Mini Budget delivered less than two months ago by his predecessor. If the Mini Budget was dubbed “The Growth Plan”, can the Autumn Budget also be a plan for growth?

It was a step in the right direction: re-implementing fiscal discipline in an effort to re-galvanise trust in HM Treasury. Notwithstanding, it’s disappointing that fairer and more creative means of collecting taxes were not applied, rather than manipulating the tax bands in a move which fiscal-drags one and all. The 40% band no longer applies to the wealthiest. The capital gains tax rates on investment income are still only 50% of those paid on working income.

There were surely opportunities missed to rebalance the tax-system in a much-needed fairer way. Especially now in the face of a looming recession – or potentially depression, when the smallest tweaks in taxes and spending will have knock on effects on the amount of money that is spent on our high streets.

Taxes aside, there is risk of a continued disintegration of public services – this will come home to roost in two years if inflation continues its current trajectory amidst public spending cuts of £28bn.

Visit our Budget Highlights and tax data for a summary of the Autumn Statement 2022.

Contact Mouktaris & Co Chartered Accountants for expert advice or click here to subscribe to our Newsletter.

With the dust still settling on the Mall following a triumphant celebration of Her Majesty The Queen’s Platinum Jubilee, one may begin to consider the tax deductibility of hosting Diana Ross, Ed Sheeran and the like – a figure reported to be around £28m.

As a general rule for tax, expenditure on entertainment or gifts incurred in the course of a trade or business is not allowed as a deduction against profits, whether incurred directly or paid to a third party such as an events organiser. HMRC are not however completely devoid of holiday spirit and provided conditions are met, certain types of entertainment are allowable. Hurrah.

Promotional Events
Events which publicise a business’ products or services are not deemed to be entertaining expenditure and so direct costs are allowable for tax if they meet the “wholly and exclusively” test. The cost of related food, drink or other hospitality is however disallowed. For example if a car manufacturer organises a golf day at which test drives are available, only the direct costs of the test drives and of any publicity material provided are allowed, together with any immaterial costs such as teas and coffees.

Gifts
Costs are allowable where gifts incorporate a conspicuous advertisement, do not exceed £50 in value (for all gifts made to the same recipient in a year) and are not food, drink, tobacco or tokens or vouchers exchangeable for goods. This could be merchandise branded with the business logo.

Staff Entertainment
Entertaining staff is allowable provided that it is not merely incidental to customer entertaining. Regardless of any deduction allowed against the profits of the business, a tax charge may arise on the employee personally. Employers may need to report the event costs to HM Revenue & Customs (HMRC) on each employee’s form P11D and pay class 1A National Insurance. Generous employers can though opt to pay the Income Tax and National Insurance Contributions on behalf of employees by entering into a PAYE Settlement Agreement (PSA).

To avoid this complicated scenario and to ensure that staff entertainment is allowable, an event would need to meet the following conditions:

1. Opening the party to all staff (not only to directors/management)
2. Limiting the cost per staff member to £150 per head (inclusive of VAT) per year. In practice, this would mean limiting the cost per general attendee to £150 per head. One would also need to consider any future events in which the limit may be breached, for if the cost per head were to exceed £150, then no tax-deductible expense could be claimed, with a tax charge arising on employees.

To avoid a tax charge, the event would need to meet the additional condition of taking place annually! If an event were to include entertainment for staff as well as customers, the apportionment of expenditure on staff would be fully allowable, whilst the apportionment of expenditure on clients would generally be disallowable (with the exception of any gifts).

Recovering VAT on Entertainment
As a general rule, a business cannot recover input VAT related to client entertainment. VAT incurred on staff entertainment is however recoverable provided the following conditions are met:
1. Entertainment is not only provided for directors/partners
2. Costs incurred are not related to entertaining non-employees. For events which entertain both employees and non-employees, an apportionment of employee-related expenses and VAT would again be made.

Contact Mouktaris & Co Chartered Accountants for expert advice or click here to subscribe to our Newsletter.

A Targeted Budget
Amid soaring inflation of 6.2% and forecasts of the sharpest fall in living standards since records began (according to the UK’s fiscal watchdog), Rishi Sunak presented a Budget which he argued would support the UK economy, businesses and families in both the short and the medium term. In contrast to the profligate Budgets of very recent times, which were arguably necessary to address a pandemic that affected all areas of the economy from all angles, this was a targeted Budget with a laser beam pointed at the erosion of disposable incomes that is likely to pursue at least in the short term.

The key measures were as follows:

• regarding personal taxes, an increase to the threshold at which an individual will begin to pay NI from 6 July 2022, aligning it with the personal allowance which is set at £12,570 per annum
• regarding employment taxes, the Employment Allowance will be increased by £1,000 from 6 April 2022 to £5,000
• regarding duties, an immediate reduction in duty on diesel and petrol, by 5 pence per litre, for 12 months
• regarding VAT, a cut in the VAT levied on energy efficient upgrades, such as solar panels and energy efficient heating

Rishi Sunak saved the “crowd pleaser”, or “low-tax-Conservative-MPs-and-commentators pleaser” until the end – his virtual rabbit out of the hat, by promising to cut the basic rate of income tax to 19p in the pound in April 2024, conveniently a few weeks before many Tory MPs expect to face a general election. Rishi has kept what looks to be substantial powder for more election-fighting fireworks. Has he done enough for the poorest people in society? Having banked most of the fiscal good news he received – higher than expected growth and tax revenues this year – he could have gone further. He is building up a war chest for the autumn. Momentum politics.

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