The first Budget to be delivered by a female Chancellor was big, bold and bruising.
The headlines suggested a somewhat traditional Labour Budget, a return to the rhythm of tax and spend.
Closer inspection of the document itself shows more of a focus on business and growth than the record-breaking tax burden and pre-Budget media coverage indicated.
Key policy changes
Employer taxes
A 1.2p increase in employer national insurance contributions to 15p from April and a reduction of the earnings threshold at which payments begin — raising £25bn a year by 2030.
Corporation tax is capped at 25p during this parliament.
Personal tax
The existing freeze in earnings thresholds for income tax and national insurance will end in 2028. The freeze drags more people into the tax net or higher tax brackets each year as their pay rises.
Spending
NHS’s day-to-day budget to increase by £22.6bn, with a £3.1bn capital budget increase.
Investment in schools to rise by £6.7bn — a 19% real-terms increase.
Non-doms
Trusts used by non-doms to shelter assets offshore will be made subject to inheritance tax — the changes are expected to raise £2.5bn a year.
Private equity Tax will rise on “carried interest” paid to fund managers on successful deals — raising £100mn a year. The current 28p rate will increase to 32p with further reform to follow.
Capital gains tax
Lower rate increased from 10p to 18p. Higher rate rises from 20p to 24p. CGT on residential property unchanged. The policy will raise £1.7bn a year.
Inheritance tax
New 20p rate for shares in Aim-listed companies, which were previously exempt.
Inherited pensions will be taxed. Inheritance tax relief for business owners is reduced, beyond the first £1m. The changes will raise about £2bn a year.
For a handy summary from the House of Commons Library, click here.
To read the 170-page Budget in full, click here.
NHS funding in focus
Many NHS commentators were expecting no more than the £1.65bn of funding for surgical hubs, scanners and radiology, announced before the Budget.
Instead the NHS will receive £22bn in additional revenue funding over two years and an increase of £3bn in capital.
This comes on top of £1.8bn announced in July to tackle the growing NHS waiting list.
Boosting business
- A Small Business Strategy designed to make accessing funding easier and opening up domestic and international markets promised for 2025.
- Tax relief for the creative industries equivalent to £15bn over five years.
- £40m of investment in the Growth and Skills Levy, boosting apprenticeships and aimed at giving learners and employers greater flexibility.
- Overall research and development funding of £20.4bn across 2025/26.
- Corporation Tax is capped at 25%
Clearview Founder and Chief Executive, Kirk Ward, said:
“Labour promised a big Budget and that’s what we got. If we are serious about improving public services, building more homes, renewing the NHS and giving children the best possible education, then we must accept that it will cost more.
“There are always winners and losers on Budget day. It is clear that in the short-term at least, that business, entrepreneurs and the self-employed must foot a large share of the bill.
“The immediate impact of tax increases is a bodyblow to business but there is hope for the medium term buried in the Budget, with a welcome focus on strategy, funding and skills.
“Looking to the long-term, if the markets are reassured by promised productivity gains and Government projections about deficit reduction, we may well be on a path to growth.
“The scale of investment in education, health and housing could well serve to energise sectors that have felt flat for years now.
“Time will tell.”
The ‘more, more, more’ Budget
The Office of Budget Responsibility (OBR) sets out that this Budget means more spending, more tax and more borrowing as a proportion of Gross Domestic Product (GDP) by 2028-29.
Readers of a certain vintage can be forgiven for considering this the Andrea True Connection Budget.
Clearview Communications 