NOT ANOTHER BUDGET SUMMARY PLEASE GOD NO

John Healey looks like a man that never misses a flight.

No messing. There two hours before boarding, kids bored off their heads. “No you can’t go to Pret a Manger, we’ve packed perfectly good sandwiches here” - that kind of a vibe.

And if I have got the right impression, then it maybe shouldn’t be a surprise that today was a damp squib. No changes to the main allowances, Income Tax, Capital Gains Tax, Corporation Tax, Inheritance Tax rates or pensions.

But there were some changes, and I have set out what I would pick out as the main ones below - roughly in order of how many of you I think will be directly affected.

Savings and Rental Income going up again

As per Reevesy’s Budget a couple of years ago, the rate of tax applied to “savings income” was due to rise by 2% from April 2027. Today though it was confirmed that there will actually be a further 2% of tax applied to income received via these means for Basic, Higher and Additional Rate Taxpayers.

The result being that as of 6th April 2027 rental income, interest on cash and fixed interest investments, as well as any chargeable gains on investment bonds will be taxed at 24%, 44% and 49% depending on your tax band.

A couple of things to think about here I reckon:

1. If you have an onshore of offshore bond that you are thinking of encashing or taking some money out of, it might be worthwhile to do this before April.

2. Those of you with large cash deposits throwing off loads of interest, might consider investing in low coupon gilts as a means of generating an altogether more tax efficient “income” for yourselves; and

3. Buy to let landlords must be really tired of having the shit kicked out of them at this point.

Cash ISAs

Again, a change to a recent Labour Budget. The government had previously planned to cut the cash ISA allowance to £12,000 from £20,000 for under-65s from April next year, with the intention of getting more young and middle aged people investing instead of sitting in cash.

However it was announced today that this change has been canned and the overall ISA allowance is going to stick at £20,000 regardless of your age.

Given the ISA is the only savings product the majority of the public seem to understand, I reckon this is a good thing.

The Pensions Allowance

When I first saw this one it made me angry to a medically dangerous level, but on closer inspection it really isn’t that bad.

The issue is this - the “personal allowance” (which is the amount of taxable income anyone can earn without paying tax) is £12,570 and this figure is frozen until 2031.

However, those of you who qualify for the full (new) State Pension will receive £12,548 this year, and £13,036 a year from next April.

What that means in practice, is that Doris (who has no income other than the State Pension) would have theoretically had to pay Income Tax on her State Pension and (given the State Pension is paid before tax has been deducted, or “gross of tax”) had to complete a Self Assessment tax return to inform the Revenue of the tax she was due to pay. Not ideal.

Step up the new “pensions allowance”.

The long and the short of it is that if you are State Pension age or beyond and receive total income more than £12,570 a year but less than or equal to the amount paid via the State Pension - you will have no Income Tax to pay.

For those pensioners however who receive more income in a year than the State Pension provides, their access to this new allowance will be gradually reduced. For every £3 of income received, over and above the State Pension, the allowance is reduced by £1. So by the time someone who thought they could claim this allowance in the first year it applies receives £13,319 of income, they can’t.

The reason this wound me up so much on first blush, is that it effectively creates a tax divide between the pre State Pension age populace (mainly “working people” last time I checked) and pensioners. Which is a) clearly discriminative and b) probably not helpful at a time when the country seems to be at each others’ throats.

Anyway, I’ve calmed down a bit given the numbers involved are really quite small, I can sort of see why they’ve done it and my doctor says I need to keep my blood pressure down.

RIP the Lifetime ISA

So the Lifetime ISA has been canned, to be replaced by a new “First Time Buyer” ISA.

The bad news is that the £450,000 price cap on property purchases, that Messrs Lewis et al. have rallied against, remains. So if you use either the Lifetime ISA or new fangled First Time Buyer ISA to buy a property which is over £450,000 in value, you won’t get any government help in doing so.

The good news however is that the old, completely unfair, penalty system has been removed immediately as of today - a very welcome move.

So if you now need to use money within a Lifetime ISA to buy a property which is over £450,000 in value, or make a withdrawal for any other reason before the age of 60, you will at least get your money back.

Business Asset Disposal Relief has been halved…

Business Asset Disposal Relief, the artist formerly known as “Entrepreneurs’ Relief”, means business owners who sell their business are able to claim a preferential Capital Gains Tax rate of 18% on disposals (when the equivalent rate of Capital Gains Tax for “normal” sales is 24%).

From April next year however, the lifetime limit on sales which qualify for this relief is being reduced from £1 million to £500,000. So someone who makes a million pound profit on the sale of their business on 6/4/2027 would need to pay £30,000 more than the same person who makes the same profit on 5/4/2027.

Long story short, if you are flogging a business maybe think about getting on with it.

…but there is a new relief for “founders”

That is, unless, you qualify for the new “Founders’ Relief” - seemingly the spiritual successor to Entrepreneurs’ Relief but not really.

Founders who meet the eligibility criteria and who go on to sell their company will qualify for a 10% tax rate applied on the first £10 million of gains. Which sounds a lot like the old Entrepreneurs’ Relief.

But the criteria to qualify as a “founder” are a heck of a lot more stringent these days. I won’t list them here in the interests of word count - you can check them out here if you’re interested.

Self-assessment reform

OK, so, tinfoil hat time. This is the one thing I can initially spot which feels a bit sneaky, there are probably more that I have missed but it is seven o’clock at night and I’m tired.

It was announced this afternoon that from April 2029, the government are going to use a different method of collecting tax from self-employed folks or business owners - primarily utilising direct debit throughout the year.

“Following these changes, taxpayers will make regular, smaller payments throughout the year, rather than large lump-sum payments long after income is earned. This will help taxpayers to budget for and manage their tax bills over the year, including reflecting changes in their income and circumstances”.

So they are framing it as doing these people a favour by improving affordability.

The sceptical man might say they would rather the money is sitting in the country’s coffers more quickly, rather than sitting in yours’ (earning interest).

None of the above is intended to represent advice to any individual. If you have any queries regarding your specific situation, please consult with a regulated financial adviser. No liability is accepted for any inaccuracy contained in the above, I’ve had to write it at the drop of a hat remember!?