The Truth About the UK Budget 2024

Summary

In a recent analysis of a significant budget announcement, the speaker outlines a series of tax changes impacting working people, including the freeze on income tax bands, an increase in employer National Insurance contributions, and adjustments to inheritance tax on pensions. The speaker criticizes the government's positioning of these measures as favorable while highlighting the real financial burden on citizens through fiscal drag. Additionally, changes to capital gains tax and stamp duty are discussed, suggesting a complex balance of raising revenue while maintaining support for businesses. The speaker promises further insights and a live discussion for audience engagement.

Takeaways

• 💰 The budget introduces £40 billion in tax increases, primarily through the freezing of income tax bands until 2028.
• 📉 Fiscal drag will result in many workers paying more tax as their wages increase without corresponding adjustments in tax thresholds.
• 📊 Although income tax and National Insurance rates remain the same, the freezing of bands means workers will bear a heavier tax burden over time.
• 🏢 Employers will face increased National Insurance contributions, which may lead to reduced wages and potential job losses.
• 👥 The Labour government is positioned as protecting workers, but the impact of frozen tax bands contradicts this narrative.
• 📈 The expected annual revenue from the frozen tax bands is projected to exceed £33.5 billion by 2028-2029.
• 🏦 Changes to pensions mean that inherited pensions will be subject to income tax if the deceased was over 75, impacting future tax liabilities.
• 📈 Capital gains tax rates have increased, with the lower rate rising from 10% to 18% and the higher rate from 20% to 24%.
• 🏞️ The government plans to shift from measuring public sector net debt to public sector net financial liabilities, potentially allowing for more infrastructure spending.
• 🗣️ An interactive discussion about the budget is planned, encouraging public engagement and questions directed at economic experts.

Q & A

What are the key components of the recent budget announced by the Chancellor?

The budget includes significant tax rises, particularly through the freezing of income tax bands and increases in employers' National Insurance, alongside changes in inheritance tax and capital gains tax.

How does the freezing of income tax bands affect taxpayers?

Freezing income tax bands until 2028 leads to fiscal drag, meaning workers will pay more tax as their incomes rise due to inflation, effectively increasing their tax burden without an official tax rate increase.

What impact does the increase in employers' National Insurance have?

The increase to 15% in employers' National Insurance and a reduced threshold will raise significant revenue but is expected to lower real wages and could lead to reduced labor supply and job losses.

What are ISAs and how are they affected by the budget changes?

ISAs (Individual Savings Accounts) are savings vehicles with tax advantages. The budget confirms that ISA allowances will remain the same, and digitalization of ISAs will be mandatory by 2027.

What are the new rules regarding pensions in relation to inheritance tax?

From 2027, if a pension is inherited from someone over 75, it will incur income tax; if inherited from someone under 75, it will remain tax-free. This change could increase the number of households paying inheritance tax.

How have capital gains tax rates changed in this budget?

The lower rate of capital gains tax has increased from 10% to 18%, and the higher rate has risen from 20% to 24%, impacting those who primarily earn through capital gains.

What is the government's new measure for public sector debt?

The government is shifting from measuring public sector net debt to public sector net financial liabilities, which includes assets like student loans and equity stakes, potentially allowing for an additional £50 billion in spending.

What are the expected effects of the changes to inheritance tax on agricultural land?

From April 2026, farms valued over £1 million will incur capital gains tax, which could significantly impact farmers' financial obligations and incentivize them to gift assets before death.

How does the government plan to address housing supply with the budget changes?

An increase in stamp duty for investment properties aims to free up housing supply, and the government expects this measure to generate significant revenue over the coming years.

What opportunities for public engagement does the speaker mention?

The speaker invites viewers to join a live discussion to ask questions about the budget, promising an interactive experience with insights from financial experts.