Tax experts Blick Rothenberg examine what today's announcements mean for your finances.
Winners
The alignment of the lower NIC threshold to the personal allowance (a rise from £9,568 to £12,570) will give welcome relief for lower earners already worried by rising costs of living. This measure gives a maximum NIC saving of close to £400, and will cost the treasury an estimated £6bn. However, the saving will be eroded by the introduction of the Health and Social Care levy, resulting in most taxpayers saving closer to £330 per year.
The savings are slightly lower for a self-employed person, although that will be softened by class 2 NIC kicking in at a later amount.
Drivers will also be welcoming a cut of 5p from tonight in fuel duties.
For those with patience, the announcement with much fanfare of a basic rate tax reduction from 20% to 19% from April 2024 can also be looked forward to. Those in Scotland are relying on the Scottish government to use their share of extra funding under the Barnett formula to pass on the equivalent reduction.
Investors will again be breathing a sigh of relief, with no changes to the rates of capital gains tax or inheritance tax.
Those with enough disposable income to spend on energy saving materials (a 5% cut in VAT was announced) or residential landlords who have an energy saving target to hit (subject to consultation) to ensure they can continue to let properties on new tenancies from 2025.
Losers
Anyone earning over £41,389 per year will be worse off than now due to the Health and Social Care levy outweighing the NIC lower threshold increase. This is a strange pinch point, and is well short of the basic rate threshold (£52,270).
Whilst the NIC threshold will align with the personal allowance, the change will not come into effect until July. So everyone earning over approximately £13,000 will initially feel the hit before the later change and questions should be asked about why this measure is not implemented from 6 April. this again smacks of a last minute change of plans, and thrust upon HMRC to deal with, meaning it had to be delayed to give everyone time to prepare.
Anyone hoping for more help due to the economic storms sweeping in with inflation rises will be upset. With greater economic performance than the Chancellor expected, many will question whether he has done enough.
Anyone without enough disposable income to spend on energy saving materials, no energy cap announcements, despite the soaring costs.
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