After weeks of leaks and speculation, including the early release today of the Office for Budget Responsibility’s Report, the Chancellor has today delivered to the House of Commons her Budget Statement. The key headlines are:
- The OBR has estimated that GDP will grow by 1.5% in 2025, instead of the 1% which was expected in March. However, from then on, the outlook is downgraded from 1.9% to 1.4% in 2026 and from 1.8% to 1.6% in 2027.
- The OBR expects inflation to reach 3.5% for this year, which is higher than their estimate of 3.2% in March. It has also lifted next year’s forecast from 2.1% to 2.5%; but has maintained its estimate of 2% for 2027-2029.
- Tax thresholds on personal tax and employer NIC thresholds are frozen for an additional three years from 2028.
- Basic and higher tax rates on dividends, property and savings are increased by 2%.
- The introduction from April 2029 of a £2,000 cap on salary-sacrificed pension contributions, with contributions above that taxed in the same way as other employee pension contributions.
- The annual ISA allowance of £20,000 is retained, but for the under 65s the cash ISA allowance is £12,000, with £8,000 designated exclusively for investment purposes.
- Fuel duty is frozen until September 2026, followed by staged increases.
- The introduction from April 2028 of a new mileage tax of 3p per mile for electric vehicles and 1.5p per mile for plug-in hybrid cars.
- A reduction to the writing down allowance main rate in Corporation Tax.
- Reduced Capital Gains Tax relief on disposals to employee ownership trusts.
- Training as part of under 25s’ apprenticeships will be free to small & medium sized businesses.
- There will be a new National Licensing Framework to encourage local authorities to provide greater freedoms to hospitality businesses; and permanently low business rates for high street businesses.
- The introduction of a Council Tax annual surcharge of £2,500 on houses worth more than £2million; and an annual surcharge of 7,500 for those worth more than £5million.
- The Chancellor set out that this budget will ensure that public sector borrowing will fall as a share of GDP and the Government will meet its stability rule a year early.
- The OBR report says that the tax increases will bring “the tax take to an all-time high of 38% of GDP in 2030-31”.
As always, the devil is in the detail! We will follow up with more information on the Statement as we get to grips with the detail
