The Budget Breakdown - Episode 9 Immediate Reaction

Mark gives an immediate reaction to the Chancellor’s Budget, calling out the heavy leaks beforehand, the rise in taxes, and the lack of a clear growth plan. He touches on changes to income tax on property and savings, ISA reform, new capital allowance rules, road pricing for EVs, salary sacrifice caps, mansion tax plans, HMRC compliance increases and national minimum wage pressures. Overall he sounds unconvinced that there’s anything in the announcement that helps businesses or boosts growth.

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Transcript

Hello, it's Mark Morton here and the chancellor has just sat down after the best part of an hour and a quarter of her speech. Unfortunately, we knew a lot of this was coming because either she had leaked it or the OBR had leaked it before she even started speaking.
 
 One way or another, it was a bit of a shambolic start to the announcements. In many respects it felt like a very old-fashioned Labour government budget, in the sense of spending more and taxing more. Leaving aside my personal views, the real issue is that if this was the government’s intention, it should have been made clear before the general election. That didn’t happen. So now, on top of last year’s forty billion of tax rises, we see another twenty-odd billion of tax rises. Personally, it’s very difficult to see a growth plan in it.
 
 The devil is always in the detail. We’ve been told about increased income tax rates on property income and savings income. Property income is one thing, but savings income is confusing as many people have already paid tax on it. There’s reform to ISAs coming in the future.
 
 Some rather odd comments were made about a new 40 percent first-year allowance for businesses but with a reduced writing-down allowance. How that fits into the existing capital allowances regime remains to be seen when the detail is published. Road pricing on electric vehicles has also been confirmed, which we already knew about.
 
 At the start of the budget speech, the deputy speaker actually told off the government for all the leaks beforehand. It used to be that nothing was leaked, and now everything seems to be leaked.
 
 There were also comments about a salary sacrifice cap. The cap of two thousand pounds, when divided by the 5 percent auto-enrolment contribution and multiplied by one hundred, gives a salary limit of forty thousand pounds. It seems that over and above that, national insurance will apply. That increases the cost for employers and affects some employees.
 
 A mansion tax is also being introduced in addition to council tax. The only slight positive is that farmers will be able to transfer the one million pound limit between married couples, although that doesn’t help if your farm is worth twenty million. It brings it more in line with other reliefs but doesn’t address the main issue.
 
 HMRC compliance is expected to bring in ten billion per year. This has risen from six to seven to now ten during this government’s time. National minimum wage increases will feed into inflation. Fuel duty going up next year will increase inflation. The salary sacrifice changes could cause inflation or job losses among young people or reduce hiring.
 
 It’s very difficult to see the growth plan here. The plan seems to be to grow public spending. It’s hard to see the upside for businesses. I understand the funding issue, but I struggle to see any real growth strategy. We’ll delve into the detail and come back with more insight later.
 
 Take care everyone.