Yesterday Chancellor John Healey announced his annual Budget for the first time in Burnham’s premiership. Mr Healey declared this budget “won’t raise tax on working people, but won’t slash public services, and won’t borrow.” Read on to find out how he proposes to meet this challenging claim.
Taxes
The Government is set to reduce the threshold for business asset disposal relief in capital gains tax from £1m-£500k, increasing tax rates from property and savings by 2 percentage points, but made no change on tax from dividends or employment and 88% of peoples’ savings won’t face tax increase, the Chancellor claimed. Higher stakes gambling machines games duty will rise from 20-25%.
The HMRC is to be given stronger power to retrieve unpaid taxes, reforming self assessed income tax.
Gas & Energy
The Government has approved the Jackdaw gas field, which the Chancellor termed “pragmatic common sense decision”: it’s predicted to create hundreds of jobs and bolster the economy by over £2bn but directly clashes with progressive climate policy and net zero aims. The Government will also move renewable energy to fixed price contracts to break “the grip of international gas prices.”
Bills
There will be “immediate action” to help households by extending VAT cuts through to July, taking £50 off the annual price cap and a new British industrial competitor scheme taking 25% off electricity bills for 10,000 prominent British firms. Sanding charges to household gas bills will also be removed. 20 million households in council tax bands A-D will receive £100 energy payment, awarded directly into peoples’ bank accounts to assist with energy bills.
The 5p cut to fuel duty will continue until July. Hire mileage allowance rate will increase from 25p to 30p.
Tariffs on 100+ supermarket items will be suspended to ease cost of living.
Carer’s Allowance expanded
There will be a Carers Allowance reform so carers won’t lose their entire allowance as soon as income reaches over the threshold.
Minimum Wage Increase
Minimum Wage and National Living Wage will increase by 3.9%;
National Minimum Wage for 18-20 year olds will rise from £10.85 to £11.27 and National Living Wage for workers 21+ will rise from £12.71 to £13.20
Business
Support for small businesses will be increased: increased threshold for small business rate relief will rise from £12k to £18k, “70,000 businesses not paying business rates.” £10m of alcohol duty relief has been pledged for small British breweries.
Extension of paid parental leave
Paternity leave has been expanded, so self employed fathers are now eligible.
Entrepreneurship
Aiming to remain “a nation that encourages growth”, the government pledges a new “Entrepreneur Allowance” that’s set to cover a year of living costs to allow young entrepreneurs to grow their business. This is as well as tripling the Trading Allowance from £1k to £3k gross income before tax is paid. British banks are “doubling their commitment to female entrepreneurs.” The government will introduce a “Founders Relief”: relief on capital gains tax & 10% rate on lifetime gains up to £10m for nation’s “most successful founders.”
Savings & ISAs
To encourage saving and investments, the Government won’t cut the tax free amount for cash ISA as had been planned by previous Chancellor, staying at £25k, and a new starter ISA will replace Lifetime ISA.
AI
The Government plans to introduce a sovereign AI unit, wanting strategic British AI firms, NHS & defense to benefit from AI. They aim for it to become “secure, safe and working.”
Pensions
Pension tax allowance: those receiving the value of full state pension will not pay income tax. The Government pledges that “every penny of pension fund surplus goes to miners.”
Banks
Banks’ surcharges will be increased from the current 3% to 6%.
Rough sleeping
£430m has pledged to eradicate rough sleeping after Prime Minister Andy Burnham announced earlier this week that they had “found the money.”
