This Wednesday, (November 26) the Chancellor will unveil her much-anticipated Autumn Budget and reveal her latest plans for filling the alleged ‘£20 billion black hole’ in the public finances. Or is it £30bn?
So what will be in Rachel Reeve’s Budget and how might it affect you? That is certainly the £20billion question because, as ever, the rumour mill is running wild with speculation and U-turns on multiple big Budget ideas have become commonplace in the past few months.
Income Tax is going up, breaking election promises! But wait, no it’s not. After being heavily telegraphed across the media and dangled before public opinion, ‘plans’ to increase Income Tax have now been dropped, as have proposals to charge National Insurance on Limited Liability partnerships (LLPs).
The latest one doing the rounds is that she will cut the National Insurance exemption on salary sacrifice pension contributions, potentially introducing a cap of £2,000.
Limiting this ‘tax break’ aims to raise £2billion in the Budget. This is expected primarily to affect higher earners, if it happens of course…
Financial industry professionals and the trade press are claiming it is likely but much and much was also written about plans to reduce the £20,000 annual tax free savings limit for Cash ISAs – it was floated for months, then apparently ruled-out entirely. Now however the FT has since reported that Ms Reeves may cut the limit to £10,000.
What else is ‘being considered’? There are reports (!) the Government may reform property taxes, replacing Stamp Duty with something else. Landlords may have to pay more taxes, Council Tax could be replaced and ramped-up on dearer properties (of which a third of the total value is in London).
There is ‘talk’ the Chancellor is looking at a new tax on electric vehicles too.
On the spending front, the Chancellor is under pressure to scrap the two-child limit for benefit uplifts – whatever side you fall on that issue, it will be an extra and unfunded cost and a few more spadesful added to the ‘black financial hole’.
There are also reports (sigh) the Chancellor will reduce household energy bills, perhaps by cutting the current 5% VAT rate on energy or reducing regulatory costs.
Again, no doubt welcomed by millions but this will not shine a light into that black hole either…
If you think all this sounds tediously familiar with rumour, counter rumour and what essentially boils down to ‘no-one knows’, you would of course be right.
Financial advisers around the country have reported increasing queries and uncertainty from clients and of course we also receive questions from those concerned at how the Budget may affect them, especially when rumour abounds.
We do our best to reassure and keep our clients and the wider public informed on the various issues though our email shots, this column and newsletters. Ultimately, in most cases it comes down to ‘wait and see’.
The Budget will affect us all in one way or another and some people will need specific advice or guidance on particular issues, which we are happy to provide once we know all the details.
We shall update you next week if anything more substantial emerges before Budget day and of course, we’ll share our views on what was in the Budget and any relevant guidance as soon we know the score!
