Check out these key points that have came from the budge and how they may affect you ?
Main policy announcements
- 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 per cent real-terms increase.
Other key measures
- 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 £1mn. The changes will raise about
Fiscal outlook
- Tax burden: Tax as a share of GDP is forecast to rise to 38.3 per cent of GDP in 2027-28, from 36 per cent in 2023-24.
- Budget deficit: The Office for Budget Responsibility says the budget will turn to a surplus of £10.9bn in 2027-28, and the government says it will achieve its “stability rule” of using revenues to cover its costs.
- Borrowing: is forecast at £127bn this financial year, up from the £87bn forecast in March. It will be £72bn in 2028-29, up from the £39bn previously forecast.
- Public debt: This will be redefined to allow extra borrowing. The OBR says the government’s self-imposed target to have debt falling within five years will be met two years early.
- Investment: An additional £100bn will be invested in capital spending over the next five years.
Do you think the end of the freeze in 2028 will bring a lot of changes for people in the middle-income bracket?