The autumn budget was once again benign with no drastic changes announced by The Chancellor of the Exchequer, The Rt. Hon. Rishi Sunak MP. He resisted making changes to pension tax relief, inheritance tax and capital gains tax which have all been expected by taxation experts in some guise. The Chancellor was keen to highlight that inflation in September was 3.1% and is likely to rise to average 4% over the next year, according to The Office for Budget Responsibility (OBR).
Mr. Sunak commented that the UK Economy is entering a “new age of optimism” as data showed that the post Covid economic recovery continues, with growth as well as unemployment data beating expectations. The OBR also reduced its estimates of the long-term “scarring” effect of Covid on the economy from 3% to 2%.
In efforts to ease the strain on the lowest earners in the economy and combat the impact of high inflation, the Chancellor announced the following notable updates:
- Universal Credit taper relief to be cut by 8% - allowing claimants to keep more of the payment
- Raising the National Living Wage by 6.6% to £9.50 an hour from next year
- Cancellation of the planned Fuel Duty increase
One clear objective in the budget was targeting skills and education, not just of children but adults as well. This was bolstered by increased investment in core sciences and the Levelling Up Fund. It was also confirmed that the Welsh Government will receive an additional £2.5bn of funding. Further to this, Mr. Sunak announced the launch of the ‘Global Britain Investment Fund’ holding £1.4bn aimed to attract overseas investment into the UK economy.
The Government has already announced the following changes earlier in the year:
- Temporary increases to National Insurance Contributions for employees, employers, and the self-employed of 1.25% from 6th April 2022
- Increase of dividend tax of 1.25% at all levels from 6th April 2022
- Return of staggered rates of Corporation Tax from April 2023 of:
- 19% for companies with profits below £50,000
- 25% for companies with profits above £250,000
- A form of taper relief for companies with profits between £50,000 and £250,000
From an individual financial planning perspective there is very little for our clients to be concerned about. Should you wish to discuss the budget or any other issues, please do not hesitate to get in touch with your adviser or any of the team.
Call: 01633 859555
Office: 5 & 6 Waterside Court, Albany St, Newport, NP20 5NT