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UK BUDGET STATEMENT
Autumn 2024
notes and comments
Abell Limited
Government Budget Statement
October 2024
prepared by:-
ABELL LIMITED , with a little help from our many friends.
Officially……
“FIXING THE FOUNDATIONS TO DELIVER CHANGE ”
– says Ms. R Reeves
Or …..
The current ‘pc’ mantra is to abuse the previous shower in every breath, to create a smokescreen to hide the new lot massively increasing taxes to pay for all the great stuff we all want (maybe) – Higher wages for State workers, NHS fixes, Defence ramp-up, Railways everywhere, Potholes abolished etc.
We set out below comments on the latest Budget of 2024 presented by our Chancellor on 30th October 2024.
The ongoing borrowing problem hanging over the whole statement is yet again to be fixed by an economy growing in overall size, and therefore reducing all the % numbers – but we normally achieve 1-2% pa anyway (despite politicians fiddling).
Apparently it’s not previously occurred to governments that growing the economy at a faster rate than 1-2% will help increase the tax-take automatically.
Luckily the Labour Party has decided this is our route to nirvana, but they haven’t explained how they are going to achieve this - basically it’s going to be by wishful thinking, as the OBR analysis confirms.
The big losers in the Budget are definitely large employers of staff, particularly if their bosses are non-doms who like swanning around in private jets drinking whisky.
Small businesses, employing a handful of lower paid staff, might consider themselves about ‘even’.
And the commentators all droning with Tables about personal tax increases are mixing things up. Personal income tax thresholds were not changed in the Budget - but due to inflation, a salary of £100k expressed in real terms each year will pay a bit more tax/NIC when calculated in real values, but not in cash terms. So it’s all smoke and mirrors really.
Budget news
NATIONAL INSURANCE
Employer NICs will increase by 1.2% from April 2025 to 15%. for the 25/26 tax year.
In addition though, the killer is that the threshold at which NIC gets charged is being massively reduced from £9,100 to 5,000. This will impact employment decisions by big employers, and accelerate the incentive to automate processes, and sack workers.
However small employers presently get £5k off their Employers NIC bill each year, this will increase to £10,500 in 25/26, which is a big increase for most employers.
Self-employed National Insurance Contributions (NICs) will be 6% for 24/25 (https://www.gov.uk/self-employed-national-insurance-rates ). Getting to look a ‘good deal’ for smaller businesses?.
CAPITAL GAINS TAX
The two rates have immediately gone up to 18% and 24% (were 10% (basic rate taxpayers) and 20% (higher and additional rate taxpayers).
The CGT rate for Business Asset Disposal / Entrepreneurs Relief (BADR) which applies to lifetime gains of £1m on certain disposals by employees and directors in unlisted businesses, continues. But the tax rate will increase from 10% to 14% for disposals in 24/25 tax year, and further increase promised.
INHERITANCE TAX
The basic £325,000 limit stays, and the inherited main property relief also. However the loophole of accumulated Pension Funds being excluded from Estates is abolished from April 2027.
Farmers are out of their trees because they say this will affect them. The jury’s out though as some people think maybe 10,000 farms will pay IHT in future, other people say maybe 200 ! Remember that a typical farm is some land PLUS the house farmer Giles and his rosy-cheeked wife live in. So the actual allowances are £325k@0% x 2 people + leaving home to next generation £175k = 825,000 at 0% + £1m Agricultural property relief too = £1.825m tax-free. Although they have to be careful not to go over £2m Estate value, and start losing reliefs too.
Agricultural/Business property relief will now be restricted to assets up to £1m. Thereafter Estates will bear 20%, not 40% IHT rate. Which sounds a ‘good ‘deal’ until you think it through - many many farms have a capital value over the new limit whilst achieving 1% annual profit based on capital. So maybe your tatty farm estate comes to £4m value, of which £2m is taxable =£400k of tax to pay over 10 years. So your meagre profit of £40k pa for working 7 days per week rain or shine would be totally consumed by the tax to pay. As Rachel would say “can’t see where the problem is”.
Small other changes will increase the tax take.
PERSONAL ALLOWANCES & INCOME TAX BANDS
The freeze continues for the foreseeable future (i.e. until just before the next election).
EXCEPT Married Couples Allowance goes up by 1.7%. Don’t forget to make sure your were born before 1935 to claim it. PS You’ll be about 90 so if you’ve made it thus far without this generous relief, I doubt this extra allowance will make a fig of difference to your continued survival.
VAT
VAT on schools fees starts January 2025. Plus in a surprise addition, the government is abolishing the schools Business Rates relief from April 2025 (many are registered as charities (somehow)). PS Qu. Definition of a private school?
This levy ignores some important details, as there are a lot of parents who have children with various special educational needs. Their local authority disagrees, and won’t allow them a place at a suitable school, or cannot find a place. So mum/dad find their child a place at one of the schools providing places for such children – these schools charge fees – sometimes the parents pay the full costs, or get some help. This will be bad PR for the government when the (upset parent) stories start emerging.
DUTIES
The current level of fuel duty will be frozen for yet another 12 months – mad!
Alcohol duty will still be frozen at its current level until February 2025, but then increasing.
A reduction in draught beer Duty of 1.7%, 1p pint.
Fags going up by RPI+2%.
VAPE Duty coming
AIR PASSENGER DUTY (APD)
The 2025-26 APD rates for economy passengers will increase in line with the forecast RPI rate of inflation, rounded to the nearest pound. There will be an additional increase in APD for those flying premium classes. Those in our company jet will be caned by a much larger increase.
BUSINESS RATES
The discount for small businesses reduces from 75% to 40% next April. An actual massive increase in payable Rates for small businesses.
So a typical small firm of shattered accountants might have paid £1,600 in Rates in 24/25, but in 25/26 this will mushroom to £3,800, which will feel like a 240% increase.
CARRIED INTEREST
Carried interest gains made by investment managers will for 24/25 tax year+, be subject to CGT at a flat rate of 32% (rather than at 18/28% previously). PS This is a non-issue as it only applies to cigar-smoking fat cats in the rarefied world of Private Equity.
NON DOMS
The Non Doms regime is binned, with some transitional allowances. Whether this is in issue for UK plc remains to be seen. Luckily if a nondom wants to wander down Kensington High Street or go to Covent Garden, we have a monopoly.
SOCIAL CARE
Ed Davey, of the Liberals, seems to have influenced the government to increase the amount Carers can earn as a way of assisting them in a very difficult job.
LABOUR RIGHTS
The rules around employment rights will be amended to give more protection to newly-employed employees. Somehow the government doesn't imagine this will have any effect on employment.
We suggest buying shares in robotics comapnies, as automation will get a boost out of this?
Similarly the rules on 0-hours contracts will be tightened to make them harder to abuse staff. Again apparently this will have no effect on employment.
VANS – DOUBLE CAB PICKUPS
Quietly the government has changed the tax rules wef April 2025, so basically they will be treated for tax similarly to cars.
This has been a loophole for many years that these vehicles were treated as vans for tax favourable treatment. No longer! Something else for all the farmers in UK to fume over…….
TAX / BENEFITS FRAUD
The government has seen the ‘easy’ target of targeting fraud / evasion as a way of getting in free money to fund their plans – let’s see how that goes.
HMRC is going to recruit thousands of extra staff to focus on this area. Presumably the previous shower (and HMRC) were happy for all of us to regard paying taxes as optional?
Closing the tax-gap is now important. Commendable but it’s never varied much for donkey’s years, so it’s not going to change in future unless the government adopts a wholesale renewal/rebuilding of their powers and tech (led by a leading chartered accountant with expertise in this area-we know one). It’s about 5% of gdp, and if it was eliminated (no cash-only builders) it might raise £40bn a year, it’s not going to happen. PS. More details here .
If you’re a ‘loafer’, apparently they’re going to ask you more searching questions before handing out £loads in Benefits to ‘persuade’ you to get off your sofa and work. Possibly even giving you slimming drugs to help you get your weight off, and make you fit to work.
OTHER BITS
Research & Development generous tax reliefs continue.
Planning controls to be relaxed, to make it easier for builders to cover green fields with houses – check out Great Dunmow as a hellish vision of the future.
Nothing about incentives to get builders to build on brownfield sites that no one cares about e.g. Dagenham/Runcorn/Middlesborough.
Remember most of what she waffled about ONLY applies to England. The subsidiaries just get a further massive cheque to spend on what they fancy.
GDP grew by an infinitesimal 0.1% in 2023, but the unemployment rate has remained low by historical standards at 3.8% in Q4 2023, below the OBR’s November 2022 forecast of 4.6%, which is good to hear.
BAD NEWS
× The official government summary of this lot of changes is “stick it on tick mostly”, instead of funding the increased spending through taxation. And of course there’s a frig to the government borrowing tape measure to make it shorter/longer so that less borrowing counts as borrowing in future.
× PSBR will be £bn no idea in 25/26, and £bn no idea even bigger in 26/27+, Total government borrowing will be 99.99% of GDP fairly soon, unless the miracle being prayed for by the government happens. PS. USA is up to 120% of GDP, and Japan even higher so this may not matter in the real world.
× See the charts below from HM Treasury etc.
× The difference between the totals of these two charts is £106bn. So as a result of the budget, borrowing is predicted to go even higher for the foreseeable future.
× If we’re lucky growth might amble along at 1.5% for the predicted future, which won’t fix things any time soon.
× No ‘Amazon’ tax being introduced yet to level up online vs. terrestrial base costs. This is a terrible omission – it really is not hard to fix this running sore, and get another £1bn+ a year in of tax for free without harming anyone that we care a fig about.
× No targets set for Civil Servants to do a vaguely decent days work. DVLA/Passport Office to attend to their post, or HMRC to answer the phone the same day you call them etc.
× or CoHo to reopen their offices, apparently covid still rampant on their premises uniquely.
× Massive NHS funding boost of £20bn+, but no mention of fixing the dearth of Dentists, or Social Workers to help with reducing bed blocking in hospitals for those with mental health problems, e.g. the Southport murders lunatic, or loads of Probation Officers to supervise (possibly dangerous) early-released prisoners etc…..
× And of course no instant fix to the appalling Post Office scandal – see years of Private Eye ™ articles. All they have to do is send a cheque for £100k to each person next week, while the civil swervants take their time working out the final numbers.
× Despite the fact that we’re at war, no mention of this. Seems the Armed Forces are so well funded they can fight a major war out of their own stocks of guns/ammo.
× No mention of legislating to make Pension Funds invest in UK companies, instead of in overseas markets.
× “Just four per cent of UK equities is now held by pension funds, down from 39 per cent 20 years ago, according to the think tank New Financial.(c)”
How much infrastructure investment could happen if they reverted to 25%+ invested in UK projects? Is that too hard to do?
the Corporation Tax ‘bonus’ for banks and oil companies will continue with another uplift, so they will pay 11% more than normal companies in 2025+.
TAX-FREE SHOPPING not to be reviewed to see if restoring some of it will bring in more tax than we refund to all the Gucci-buyers in Knightsbridge.
But there's another £25m lobbed to Wales to keep redundant mines slag heaps safe.
Download pdf of this briefing
.
HM Treasury Document Executive Summary -
but beware! it's 168 pages, and only pages 167-168 are interesting
autumn 24 budget <---Treasury website here
Thanks UK Treasury© and FSB particularly, for the data
-end-
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