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CHANCELLOR ‘FIXES’ THE FINANCES WITH TAX RAID - BUT PUSHES BACK SPENDING CUTS STEFAN BOSCIA JEREMY HUNT delivered a pre-Christmas lump of coal to Brits across the country yesterday as he unveiled a swathe of business and personal tax hikes. Stealth income tax hikes are set to squeeze families, while businesses will pay more in National Insurance Contributions as the government tries to balance the books. The Chancellor raised £55bn in his autumn fiscal statement through a mixture of tax rises and spending hikes, with Hunt saying fiscal consolidation was
needed “to tackle inflation and keep mortgage rises down”. It came as the Office for Budget Responsibility said the UK was already in a recession and that living standards will “fall seven per cent over two years, wiping out eight years’ growth”. The highest income earners were hit hardest as the top tax bracket was reduced from £150,000 to £125,140, while the Chancellor also froze thresholds for the two lower brackets. The dividend allowance was slashed from £2,000 to £500, while the capital gains tax allowance was slashed from
£12,300 to £3,000 in policies described as akin to “crushing the entrepreneurial spirit” by accountancy firm HW Fisher. The Chancellor said “we ask those with more to contribute more” and that the UK’s historic levels of Covid-19 spending has “to be paid for”. Whitehall departments were told they would have to make “efficiencies to deal with inflationary pressures in the next two years”, while difficult decisions on spending cuts were deferred until after the next election in 2024. The energy price guarantee will continue in targeted fashion at a higher
level beyond April’s current deadline. The NHS and education budgets got a bump, while pensions and benefits will increase in line with inflation next year. There were pre-statement rumblings in Westminster that the right of the Tory party would rebel against the expected tax hikes when they come to a vote next year. One senior Tory MP said Hunt and Rishi Sunak “have killed the concept or argument of a Conservative way of an economy”. When asked about a potential rebellion, they said: “By April, if MPs are seeing real
£HIGHER RATE THRESHOLD FALLS TO £125,000 IN RAID ON HIGH EARNERS £INCOME TAX THRESHOLDS FROZEN IN STEALTH INCREASE ON MILLIONS
£DIVI AND CAPITAL GAINS TWEAKS TO HIT ENTREPRENEURS AND INVESTORS £NEW TAX ON ENERGY GENERATORS AND EXPANDED WINDFALL TAX
AT A GLANCE
£SO-CALLED ‘JOBS TAX’ THRESHOLD FROZEN IN £25BN BILL FOR BUSINESS £PENSIONERS KEEP ‘TRIPLE LOCK’ AND BENEFITS UPRATED WITH INFLATION
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hardship and real problems and an economy deeper into recession then I think all bets are off.” Labour shadow chancellor Rachel Reeves said “no other advanced economy is cutting spending or increasing taxes on working people as they head into a recession”. “No-one was talking about cuts to public spending two months ago,” Reeves said. The Chancellor did say he was keen to work with the City on changes to financial services regulation in an attempt to replicate the 1980s success of Nigel Lawson’s ‘Big Bang’.
£BUSINESS RATES RELIEF TO HELP RETAIL AND HOSPITALITY BUSINESSES £CHANGES ANNOUNCED ON SOLVENCY II REGULATIONS TO FREE UP INVESTMENT