Responding to the Autumn Budget, Steven Martin, Senior Tax Manager at HWB Chartered Accountants, said:

“I would have liked to see more simplification in the range of tax rates and allowances. Instead, there is more complication, with fine judgements needed about marginal rates when it comes to tax planning."

“The heavy lifting on tax receipts for the government will come from the freezing of personal tax and pension allowance thresholds. With £70 billion in tax-raising measures in this Chancellor’s first two budgets there is little to support growth and business."

“With inflation continuing to be stubborn, assuming people’s salaries keep up with inflation on every pay rise, the government will keep a larger proportion of take-home pay. By April 2028, it is estimated that around 780,000 more people will be paying basic rate tax which starts at £12,570. Nearly a million more will pay the higher rate, starting from £50,270."

“Freezing thresholds risks an inflationary effect because it could drive up wage demands in the workplace to compensate for the extra income tax employees have to pay. Pensioners with no other income will also pay be brought into the tax net as pension income starts to exceed the personal allowance."

“Individuals with investment income in the form of savings, property, and dividend income will also be hit with a 2% increase in the headline rate of Income Tax on their income. The Chancellor also announced that National Insurance relief on pensions contributions will be capped at £2,000. This could be a further disincentive to make provisions for their retirement, so creating an extra burden on the state when the generation, who should be saving now, hits retirement age."

“If you are on the National Living Wage and working full-time with auto-enrolment for a pension, you won’t be affected, but everyone else in the workplace will. Essentially, while the Chancellor has not raised the rate of tax for employees, she has elsewhere by broadening the base of opportunities to collect more."

“On Inheritance Tax, in my view she has corrected an anomaly and made the £1 million business property relief allowance transferable between spouses. This is a move that will be welcomed by many family businesses and farmers."

“Less welcome by business will the reduction in writing down allowances for qualifying plant and machinery from 18% to 14%. A new 40% First Year Allowance for main rate expenditure will lessen the impact, however ultimately this is a tax-raising measure from business."

“Among other tax-related measures, the Chancellor has introduced a further layer of complication, not least on the administration and make-up of ISAs. Our message, as ever, is to take professional advice on the tax aspects of financial planning especially now given the more complex set of applicable rates and allowances.”

For more information, visit here. HWB Chartered Accountants, founded in 1985 and based at Chandler’s Ford, near Southampton, provides business and tax advice.