A few budget thoughts in an easy speak style!
Personal taxes rates remain frozen (post a tiny allowance increase). What that actually means is pay rises and inflation eat into that amount. Pay rise will drag you up to pay more tax and inflation will eat into the real value of those thresholds. It’s an increase of sorts. Albeit through the back door. Just say there’s no change – it’s easy than getting into an argument with a clever person.
Coronavirus spending is an eye watering £355 billion and this year will be a further £234 bn! The largest peacetime borrowing ever. Make sure your children are prepared to pay that back forever. A thanks for making them miss school. Furlough schemes continue until September, small self employed incentives to run and non essential business grants. This is around 5bn pounds and 6k per premises for non essential and 18k for hospitality. (Where is this money coming from) Business rate holidays for hotels, pubs etc to continue for nine months.
Corporation tax is raising from 19 to 25 percent in 2023. Which is astonishing from a party that prides itself on low CT levels. But sits before an election so subject to change… there’s also 130 percent expenditure allowances against investment into machinery etc. There are some small enhancements to the existing apprentice schemes. Minimum wage will increase to £8.91 from April. Minimum wage workers will be happy. Non MW workers not so much.
Stamp duty holiday remains in some ilk until September. There are a raft of other house buying incentives including government backed 95 percent LTV and help to buy. There is further stimulus into a very stimulated market. The house-builders will be happy.
Interestingly IHT and Capital Gains tax levels stay frozen until 2026. This was identified as a pre budget target area. I suspect some donors have had a word. I’m not a cynic..
Unemployment is predicted to peak at 6.5% next year, well below the forecast 11.9% prediction. I suspect it may be slightly more but also expect to see further encouragement to employ if that starts to look ore than the 6.5%. Continued furlough pay will help. Absolutely nothing to do with May elections.
VAT held across the piece and remains at 5 percent for hospitality until September. Then to 12.5 percent for 6 months. Don’t expect the pubs and hotels to pass it on! They need to recover! Your pint will still cost twenty pounds in London and one pound in the North.
There is some decent money for arts recovery (400M) and sport recovery (300M). As well as funds to help address domestic violence (19M). The latter very welcome as the rise in domestic violence cases during lockdown has been shocking.
I can’t see any increase to public sector pay (nhs workers will be more happy with a clap on a Thursday at 8pm) and no change to Entrepreneurs Tax Relief, again an easy target that was touted before the budget.
It’s a budget that helps the supply chain in the short term through further house building stimuli. It won’t help in the longer term with Corporation Tax taking 25k in every 100k profit. But it does encourage investment instead of profit.
The Freeport’s are a post brexit stimulus (not that the Brexit word was mentioned once yesterday!). An old concept that gives ports (these are plentiful in the Middle East) simplified tax, customs and planning rules. Potentially helpful for future timber importing.
There’s no rise on duty for booze and fuel. So feel free to drink both guilt free. Unleaded petrol though, no one needs lead poisoning.
That’s the condensed version. Extended version is available from a proper economist. My head hurts.
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