It was another do nothing Budget from Chancellor Hunt, as no announcements on long term energy production, roads, social housing or high speed internet infrastructure were made. The regressive IPT remained unchanged and a measly 2p cut in NI offered workers about £8 a week extra from April onwards. Many of the lower paid are still better off on benefits if they have dependents and this is a major brake on reducing unemployment, or under-employment. Raise the income tax threshold to 20K a year, abolish NI for workers paid less than 15K, make work actually pay.
Here’s some comment from various industry experts;
IPT – SONG REMAINS THE SAME
Cara Spinks, Head of Insurance Consulting at leading actuarial consultancy OAC, commented: “The OBR expects revenue from Insurance Premium Tax to rise even higher than expected over the coming years compared to just four months ago, increasing its forecasted revenues by more than £370 million between 2023-24 and 2028-29.
“We are disappointed that the Chancellor failed to take advantage of the Spring Statement to announce a reduction in IPT for health insurance products such as private medical insurance and health cash plans which could have helped make these products more affordable for consumers. A strategic reduction in IPT on health insurance could encourage a greater take up of the independent health sector, easing pressure on the NHS and reducing workplace inactivity due to long-term illness, which rose by 200,000 in 2023.”
ISA AND NI
Andy Mielczarek, founder and CEO of SmartSave, a Chetwood Financial company, said: “It was good to see the British ISA included in today’s budget. It’s only right that the Chancellor focuses on helping people rebuild and grow their savings after years of high inflation.
“However, while this is generally a positive move, there is still an awful lot to be done to empower people to effectively save, invest and achieve their financial goals. ISAs are just one solution of many, so we need the Government to broaden the scope of its policies to include the wider savings market.
NI Cut
Andy added: “Cutting NI will be celebrated, but we cannot escape the limited effect it will have. Someone on a salary of £30,000 will only get an extra £348 in their pocket annually thanks to the change, which will do little to reverse the impact of rampaging energy bills, food prices and living costs over the past two years.
“We should not be overly critical; the Chancellor does not have a bottomless pot of funds to allow for huge sweeping tax cuts. Instead, though, it would have been good to see a greater focus on policies and reforms that could empower people to effectively save, invest, and achieve their financial goals.”
PRIVATE PENSIONS
Lily Megson, Policy Director at My Pension Expert, said: “Fast-tracking the Pot for Life initiative is a step in the right direction. Small pots are an issue that have plagued the sector for some time, with billions of pounds sitting unclaimed in lost pots.
“However, this policy doesn’t address the longstanding issue of pension engagement, which is completely intertwined with small pots. The government must go further to ensure pensions are not a case of “out of sight, out of mind” – employees must have access to the support they need to understand how many pensions they have, where they are, how much is in them, and how they are performing. Only then can they make informed decisions about their financial future.
“We urge the government to go much further; bring forward the pension dashboard, help consumers track down lost pensions, and put mechanisms in place to empower people to better plan for their financial futures.”
MORE PENSIONS TWEAKS
Faye Church, Senior Chartered Financial Planner, Investec Wealth & Investment (UK) said:
“The abolishment of the Lifetime Allowance has brought with it a new hope for many to enable them continue to save for retirement. It has brought relief to those that would have been faced with a Lifetime Allowance charge, upon taking benefits, as well as those not taking any benefits, but tested against the Lifetime Allowance at age 75. Although, the limit to tax free cash being capped at £268,275, or the limit attributed to any pension protection in place, meant it wasn’t as first thought.
However, come 6 April 2024 there will no longer be a Lifetime Allowance, which brings with it opportunity for those that would have been restricted previously. Since the announcement over half of higher rate tax payers have restarted, increased or plan to increase pension contributions. Nearly a quarter have delayed retirement so they can continue to contribute to a pension, evidence that there is a huge opportunity to revisit pension provision on the run up to retirement, where appropriate, you should speak to your adviser.”
FUEL DUTY FROZEN
RAC head of policy Simon Williams said:
“With a general election looming, it would have been a huge surprise for the Chancellor to tamper with the political hot potato that is fuel duty in today’s Budget. It appears the decision of if or when duty will be put back up again has been quietly passed to the next government.
“But, while it’s good news that fuel duty has been kept low, it’s unlikely drivers will be breathing a collective sigh of relief as we don’t believe they’ve fully benefited from the cut that was introduced just two years ago due to retailers upping margins to cover their ‘increased costs’. This has meant fuel prices have been higher than they would otherwise have been.
CGT
Faye Church added: “Capital Gains Tax arising from residential property is set at a higher rate that gains on other assets. However, the Chancellor states that if this rate were reduced it would in fact increase revenue through more transactions. As a result, the higher rate will be reduced from 28% to 24% in April 2024.
“The Capital Gains Tax allowance again remains set to be halved on 6 April to £3,000 and has been steadily reducing since April 2023. However, CGT still stands at a much more favourable rate of 10% basic rate and 20% higher rate. Although, could this be a window of opportunity to take advantage of such low rates as there has been some speculation that rates may rise. The other big advantage is that Capital Gains tax dies with you, yet, there is speculation again as to whether this will remain in future.”
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