A Budget for families and workers as Chancellor fails to pull any rabbits out of the hat when it comes to business

Tim Sarson, Head of Tax Policy at KPMG UK, said: “We witnessed a Budget that focussed on supporting families and workers ahead of an impending election but there were few announcements of note for businesses.

“Workers and families will be pleased with some of the give-aways today, although they may fail to offset the effect of recent threshold freezes.

“The big news for the general public will be the cut in National Insurance (NI) and the increase to the High Income Child Benefit Charge threshold.  These changes form the vast majority of the tax cuts announced today and will cost £10 bn in 2024/25 rising to £11.5 bn by the end of the forecast period. 

“The tax rises will be felt mostly by non-domiciled individuals, those with furnished holiday lets and those that benefit stamp duty relief for multiple dwellings. 

“The announcement on the non-dom regime goes further than expected with a planned total abolition of non-domicile status and replacement with a four-year regime.  To sweeten the pill there will be a transitional two year period when existing non-domiciled individuals can bring foreign income and gains to the UK and pay tax at 12% on those remittances.  Nevertheless this could create uncertainty for those thinking of relocating to the UK.

“Carrying on the theme of helping workers, the raising of the VAT registration threshold to £90,000 will be welcomed by small business owners. It does not however solve the cliff-edge problem for growing businesses, it just moves it.  The disincentive to growth is still there.

“Beyond the headline grabbing announcements there was relatively little of note for businesses.  The extension of full expensing to leasing has been largely anticipated although the Chancellor’s comment that this would happen when ‘finances allow’ may raise some eyebrows as to timing.  The extension of the windfall tax on energy providers to 2029 will be a disappointment for affected businesses.  But there were some pieces of good news scattered around with announcements of a freeze to alcohol duty to support the hospitality sector and more generous tax incentives for the creative sector.

“All eyes will now turn to the election and, if dates allow, a potential Autumn Statement later in the year.  Tax is currently failing to be a dividing line between the two main parties but there is still time.”

-ENDS-

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