Chancellor Rishi Sunak delivered surprisingly few tax surprises in the Budget today (October 27), notwithstanding a five-point plan to improve centuries-old taxation on Britain's alcohol consumption.
Echoing the "levelling up" mantra of the prime minister, Sunak spoke at length about near-term spending plans, while simultaneously reining in longer-term fiscal objectives.
He claimed the government's forthcoming investments would amount to an "infrastructure revolution" focused on the well-being of the nation as a whole. He said: "The simple truth - [is] we are bound together by more than transactional benefit. We are, and always will be, one family, one United Kingdom."
The chancellor promised to increase research and development expenditure, but acknowledge the government would miss its previous target of spending £22bn a year by 2024. He said the government will spend £20bn a year by that date, with the £22bn goal being reached by 2025-27.
With the government having unveiled some notable tax changes only last month, Sunak made relatively few taxation announcements this time around. But there were, as ever, points of note.
An 8 percentage point drop in Universal Credit taper rate to 55p was announced as a means to help pay more to working households, allowing them to take home more money for every £1 earned.
"Universal Credit is a tax on work", said the chancellor, who also pledged to raise the national living wage to £9.50 an hour.
But, at a time when the temporary £20 Covid enhancements to UC is being ended, and the economy is still vulnerable, this was still seen as a tax on those who cannot work.
Rachel Reeves MP, shadow chancellor, said: "Sunak took £6bn from Universal Credit claimants and now expects them to cheer £2bn back."
Much of the commentary in the lead-up to the Budget this year has centered around the new Health and Social Care tax.
On September 7, prime minister Boris Johnson told the House of Commons that dividend rates would increase by the same amount as National Insurance - 1.25 percentage points - to fund the cost of care.
As Sunak said in his speech: "Healthcare spending will increase by £44bn by the end of the parliament... The new Social Care Tax will go towards the NHS and social care services."
Inheritance tax had also been viewed as a possible pot for the chancellor to draw on, given that latest data from HM Revenue & Customs revealed that tax receipts collected in the half-year from April to September this year was £3.1bn, compared with £2.4bn for the same period in 2020. But no changes were made - again.
Pension and property
From 2024-25, the government will allow low-paid workers in ‘net pay’ schemes to claim a top up to make up for lack of pension tax relief.
But a lack of support for pensioners was noted. Rachael Griffin, pensions specialist for Quilter, said: "Today’s Budget will have left many pensioners feeling forgotten about at a time when their finances continue to be squeezed.