| We’re now one week on from the Autumn Budget announcements from Rishi Sunak and Chancellor Jeremy Hunt, and have had a little time to digest what was said. With families and businesses struggling to meet increasing costs and mortgage payments, inflation announced at 11.1%, and Christmas just around the corner, everyone was keen to know what would be done to help them on a personal level. Economic stability and confidence were said to be at the heart of the PM’s agenda, and fairness and compassion promised, but what was actually delivered?
Here are some of the key announcements:
Taxation and wages:
- The threshold for when the highest earners start paying the top rate of income tax will be brought down from £150,000 to £125,140.
- Income tax, personal allowance and higher rate thresholds will be frozen for a further two years, until April 2028 – this means that millions of people will pay more in tax when their incomes rise.
- The main National Insurance and inheritance tax thresholds will be frozen for a further two years, until April 2028.
- The National Living Wage will be increased from £9.50 an hour for over-23s to £10.42 from April next year.
- Tax-free allowances for dividend and capital gains tax is due to be cut next year and in 2024.
Energy:
- Help for energy bills will be extended, but it will be less generous from April next year. There will be targeted support with the cost of living for those on low incomes, disability and pensioners.
- A windfall tax on the profits of oil and gas firms will increase from 25% to 35% and be extended until March 2028.
- New “temporary” 45% tax on companies that generate electricity will be applied from January.
Economy and public finances:
- The Office for Budget Responsibility (OBR) judges the UK to be in recession, meaning the economy has slowed for two quarters in a row
- It predicts growth for this year overall of 4.2% but that the size of the economy will shrink by 1.4% in 2023
- The UK’s inflation rate is predicted to be 9.1% this year and 7.4% next year
- Government will give itself five years to hit debt and spending targets, instead of the current three years
Other measures:
- Means-tested benefits, including Universal Credit, will rise in line with inflation (10.1%).
- State pensions will also rise by that same amount.
- Rent rises in the social sector will be capped at 7% in the next financial year.
Essentially the budget was full of tax rises and budget cuts, to help fill “the black hole”. For some, it may mean earning that little bit more, but this being cancelled out by inflation and taxation. For others, there will be much more of an impact from these changes. As an industry, we have started to see some confidence and calm return to the UK markets, bringing some much-needed stability. Lenders have started reducing their rates slightly, partly due to increased confidence, and partly as some had overpriced initially. However, rates are not expected to reduce to the levels we have been used to over the last few years, and it is expected the Bank of England will increase the base rate again in December. Experts predict that rates will continue to rise and peak in 2024, and that house prices will fall by up to 9% by the end of 2024, before increasing again.
If you are looking to purchase a property, raise additional funds, have an existing mortgage where your rate is coming to an end, or just have any concerns at all on how these changes may affect you or your chances of getting a mortgage, please get in touch with us. Likewise, if you are a landlord unsure of how the changes could affect your portfolio, give us a call. Our expert advisers will be happy to discuss your needs, and have access to the latest products available from the whole of the market.
Call us on 01702 538800 or email enquiries@ingard.co.uk |
