So it's THREE whole weeks after Labour's first budget and besides medium sized family farms it seems that no one is really complaining too much....
I think TBH I listened to it, live as it goes, we were driving at the time, and I thought 'not that much to it, really', nothing particularly unexpected, nothing too bad, except maybe employers getting stung with increased NI contributions, and of course the farmers, I think they should U turn on that TBH.
Budget summary
Income Tax and National Insurance
Slightly bad news...
The threshold freeze will continue until April 2028 when it will be increased in line with inflation. There were no changes to the income tax or employees national insurance rates. Three more years of stealth increases is not particularly good news, but at least there is an end to it in sight, and by then it'll almost be election time again so they'll probably stick to this pledge.
National Living / Minimum Wage
Good news..?
The national living wage will increase from £11.44 to £12.21 per hour from April 2025. The rate for 18-20 year olds will also increase from £8.60 to £10.00 per hour, and the rate for under 18s and apprentices will increase from £6.40 to £7.55 per hour.
I mean I think this is a massive win, although it makes me question my own job's value - it makes working for Tesco seem relatively MUCH more attractive. One hopes other jobs go up in line with this, otherwise EVERYONE is just gonna want to do those easy low-paid jobs!
Employers’ National Insurance
Lose!
The main thing here was employers’ rate of national insurance will increase from 13.8% to 15%. There were some minor changes which will help very small employers, but for anyone employing two or more people, this looks not so great!
VAT on private schools
VAT will now be charged on private school fees with effect from January 2025.
MASSIVE WIN, as if they were charities. I think private schools are a good candidate for the most harmful institutions in society.
Capital Gains Tax
OUCH!
The headline rate of capital gains tax will increase from 10% to 18% in the basic rate band, and from 20% to 24% in the higher rate band from April 2025.
I mean that's crushing for anyone with a mixed income relying on investment returns, well I say crushing, it really makes no sense to have a lower rate for leeches compared to people actually working for a living, and we still a lower rate, a MUCH lower rate here.
Corporation Tax
More stability for business...?
There will be no immediate change to the current marginal corporation tax system. The Chancellor did however confirm that corporation tax rates will never exceed 25% for the duration of this parliament.
Inheritance Tax
Inheritance tax thresholds will be fixed at their current levels for a further two years until April 2030. From April 2027 inherited pension pots will be subject to inheritance tax.
Honestly I had no idea pension pots could be inherited, I thought they just died with the pensioner! So fair enough, tax them! Literally there is NO JUSTICE to passing wealth on to children.
Domicile
The concept of “domicile” will be abolished from the UK tax system, with the non-dom tax regime being scrapped entirely from April 2025. This will be replaced with a new residence-based regime.
Makes sense to get clarity over this I think.
Response...
38% of British adults believe the Budget will leave them worse off, while 7% think it will make them better off.
51% expect the economy to get worse over the next 12 months and only 17% expect it to get better!
We really are a nation of pessimists, or should I say realists....?
Final thoughts....
I think this budget will have a moderately stifling effect on economic growth, the government is going to have to work hard to make sure that increased tax revenue goes towards effective investment, spent efficiently.
The problem is I'm not sure that's ever happened before...?!?
TBH I don't really see what else they could have done?!?
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