Chancellor John Healey has delivered his first budget. He called it “a budget for working people, a budget for businesses, large and small”.
At a time of global economic storms, he said, the Chancellor announced that he was delivering his budget whilst meeting fiscal rules, and pledged that this budget would deliver “breathing space for today and fresh hope for the future”.
More powers would be given to HM Revenue and Customs, to close loopholes in the tax system, improve compliance, and have stronger powers to pursue overdue or underpaid taxes.
A lot was said about the effects of the wars in Ukraine and the Middle East on the UK economy, principally oil and gas prices, and the Chancellor recognised the pressures this put onto ordinary households and businesses, with a pledge to ease some of the more immediate pain. There was mention also of long term plans to reduce energy costs in the long term, whilst adhering to pledges on clean energy and the plans for net zero by the year 2050.
Help with energy costs In detail –
– The 0% VAT rate on electricity to be extended to 1 July 2027
– Gas standing charges to be removed. Standing charges on electricity will be looked at separately, at a later date
– Households in Council Tax bands A-D will automatically receive a £100 payment this winter to help with energy costs
Business and private motorists get some help –
– The mileage rate for the first 10,000 business miles to be locked in at 55ppm (up from 45ppm)
– Miles over and above the first 10,000 to be increased to 35ppm (up from 25ppm)
– Fuel duty frozen again, until at least July 2027
Other cost of living measures –
– Import tariffs to be removed from over 100 products. This should help to bring down the price of a range of imported goods
Business Rates –
The Government had previously reduced business rates by 20% for entertainment industry venues (pubs, clubs etc) but from April 2027 it goes one further, with the announcement that the threshold for small business rate relief will increase from £12,000 to £18,000. This will apply to all retail, hospitality and leisure businesses. Businesses in those sectors who cannot meet the threshold will not have to face any above-inflation rates rises for two years.
Bank and their contribution –
The Chancellor praised the banks for their “huge contribution to this country in the tax they pay, and in the jobs, industry and investment they support”. He went on to say that he would be looking to the banks to help fund the breathing space needed by British families. A 3% increase on the bank surcharge was announced, taking the surcharge to 6%. The increase would remain in place for 15 months, from January 2027.
Taxes –
– No changes to Income tax rates or allowances
– No changes to Corporation tax
– No change to Dividend tax rates, and the £500 tax free dividend allowances appears unscathed
– No change to the main rates of Capital Gains Tax (CGT) announced, however the threshold for Business Asset Disposal Relief to be reduced to £500,000 (down from £1m)
– No mention of Inheritance tax in this budget
Other Matters –
– A new CGT relief was confirmed – “Founders Relief” – this will include a lifetime 10% rate on gains of up to £10m for founders of “Our most successful firms”. This, said the Chancellor, is “how we make Britain the place where the companies of the future are built”
– People on ordinary incomes to be encouraged to save and invest, with the £20,000 cash ISA tax free limit to be continued. He said he was also looking at instigating a new “starter” ISA for first time investors
– Machine Games duty to be increased to 25% (Up from 20%), whilst at the same time “protecting pubs and seaside arcades”
– Online marketplace sellers will face strengthened rules aimed at ensuring sellers cannot avoid paying VAT on online sales
– The National Living Wage will increase to £13.21 (up from £12.71) for people aged 21 and over, and to £11.27 (up from £10.85) for people aged 18-20
– The Government is extending parental pay to 160,000 additional fathers, including self-employed, who have previously missed out
– More spending control to be handed to local government, who will also receive a share of the nation’s income tax
– Rental income tax surcharge increased to 4% (up from 2%). Same increase for Savings income, from 20%/40%/45% to 24%/44%/49%.