BUDGET

So the 2025 Budget is done. While there is some relief that the worst fears over some of the kites flown in the months leading up to Wednesday were never realised, we nevertheless had a ‘tax big and spend big’ Budget.

Possibly having learned a lesson from last year’s Budget and also from the reactions to the ideas floated pre-Budget, the Chancellor appears to have managed to raise £26bn of taxes without upsetting any particularly vocal groups – largely because much of the “heavy lifting” in raising those taxes has been achieved by retaining rates and allowances until 2031. As the previous Government realised, this gradual increasing of liabilities ‘in the future’ seems not to provoke the same reaction from the public as, say, a rise in the rate of income tax. It is incredible to think, though, that some of the bands will have been in place unchanged for around 20 years by 2031 and there is no certainty that they will increase even then.

There were however 2% increases in income tax on dividends, rent and interest and these will come into force over the next few years. The logic behind this is to increase the tax on non-earned income to bring it more into line with earned income, which of course suffers not only tax but also national insurance. It is interesting that that logic has not been applied to pensions income.

 There was a small amount of good news for those businesses that will suffer under the new IHT rules in relation to limiting Agricultural and Business Property Relief; £1m of relief is to be transferrable between spouses. This at least makes it more straightforward for spouses or civil partners to access their full entitlement to the relief. However, this does not begin to alleviate the severe financial problems that the policy will cause to many businesses.

The information contained herein is given by way of general guidance only, is correct and applicable only at the time of delivery and no action should be taken solely on the basis of the information contained herein. Ensors Accountants LLP will be pleased to provide further guidance on the issues, and how they might affect you. No liability is accepted by the firm for any actions taken without seeking appropriate professional advice.