Today’s Budget was preceded by fewer leaks than most in recent years. That is a positive. However the Budget itself seemed rather thin to me.
There is some rebalancing in favour of lower-income households, new young workers, families, carers, and small businesses, but this appears modest. Revenue will be raised, among other areas, from taxes on gambling, on banks and on bank savings income.
THE MORE THINGS CHANGE…
Changes which will affect many of my clients include the following:
- The £100 January 2027 household energy grant to many households (council tax bands A to D) will not be taxable
- Trading allowance: Self-employed income up to £1,000 total in a tax year can be ignored. Or £1,000 can be deducted from self-employed income instead of real expenses. This rises from £1,000 to £3,000 in April 2027
- HMRC mileage rates increase from April 2027: Cars and vans — 55p for the first 10,000 miles and 35p above that; Motorcycles — 24p for all mileage; Bicycles — 20p for all mileage
- Bank and building society interest will be taxed 2% extra from April 2027 (22%, 42%, 47%)
- Capital allowances rates will change slightly, yet again.
THE MORE THEY STAY THE SAME
A few of the areas that have been left alone:
- No significant changes to capital gains tax rates for most disposals
- No change to relief for personal pension payments, or for ISA limits
- No change to student loan repayments
- Details of the High Value Council Tax Surcharge are yet to be released, but at present it is due to start from April 2028 and will apply to properties in England which are valued above £2 million.
SIMPLIFICATION?
There was no simplification that I could see.
The number of different rates of tax, even just for income tax and national insurance, from next tax year becomes rather bewildering.
Small, temporary VAT changes to domestic utilities offer meagre reductions and cause a lot of extra work for suppliers.
The increasing State Pension and the frozen tax-free personal allowance threatened to drag many pensioners with no other income into paying tax. This has been addressed, but rather than raising the tax-free amount for all, a new ‘pension tax allowance’ is being introduced. This adds a layer of extra complexity, and I struggle to see how it can be fair that someone whose only income is State Pension of £13,000 will pay no tax, whereas someone whose only income is a salary or profit of £13,000 will be taxed on the amount above their personal allowance.
Many tax advisers and taxpayers will also have been hoping for some postponement, or rationalisation, of the move to Making Tax Digital, which from a technological point of view is not going entirely smoothly during this first year, when relatively small numbers of taxpayers have been obliged to join.
Small improvements, but I can’t help feeling there has been some rearranging of the chairs on the deck of the submarine.
