WINNERS AND LOSERS OF TAXES TURNAROUND
THE fall-out from the Government’s emergency budget just over three weeks ago will create some winners – but more losers in various sectors.
LOSERS PENSIONERS
THE incomes of our pensioners face a new threat after Jeremy Hunt refused to commit to passing on the full state pension triple lock increase.
The Chancellor insisted: “I’m aware of how many vulnerable pensioners there are and the importance of the triple lock, but I’m not making any commitments on individual policy areas.
“But every decision we take will be taken through the prism of what matters most to the most vulnerable.”
HOMEOWNERS
THOSE with a two-year fixed rate expiring in the next few months may face real difficulties as interest rates rise while some buy-to-let landlords may find the sums fail to add up.
New two-year and five-year deals are now over six per cent.
CONSUMERS
A TWO-YEAR freeze on the energy price cap, which was a flagship policy for Prime Minister Liz Truss, will now last only until April.
The energy price guarantee, which would have kept the average energy bill at £2,500, was intended to go through until October 2024.
The Treasury will consider what measures they take beyond April, but any aid is likely to be more targeted at the poor and elderly.
TAXPAYERS
WORKERS will no longer benefit from the planned
1p cut to income tax promised by the Government, due to start next April.
The new Chancellor confirmed the reform to the basic rate of income tax, which was scheduled to drop from 20 per cent to 19 per cent, would be shelved “indefinitely”.
But the reversal of the 1.25 per cent rise in National Insurance will still go ahead from November 6. The increase was introduced only in April.
PUB OWNERS
THERE was a blow for pubs when Mr Hunt scrapped a planned freeze on alcohol duty while drinkers face higher prices for their booze.
The Government said scrapping the alcohol duty freeze will save £600million a year. But Emma McClarkin, chief executive of the British Beer and Pub Association, said: “The freeze would have delivered a £300million saving to our industry at a time when we desperately need any relief we can get, to help to maintain the lid on spiralling costs and keep the price of a pint affordable this winter.”
DRINKERS
THE price of beer and wine is set to increase. The Government had claimed its proposed freeze on the rise would save pub-goers 7p on a pint of beer, 4p on a pint of cider, 38p on a bottle of wine and £1.35 on a bottle of spirits.
INVESTORS
THE Chancellor scrapped plans to cut dividend tax rates in a blow to investors.
In April, all rates went up 1.25 percentage points. It means basic rate payers now pay 8.75 per cent tax on dividends, up from 7.5 per cent, higher-rate payers will pay 33.75 per cent, up from 32.5 per cent, while top-rate payers will pay 39.35 per cent, up from 38.1 per cent. These rises were due to be done away with from next April but will now stay where they are.
CONTRACTORS/ FREELANCERS
A HUGE blow has also been dealt to selfemployed contractors and freelancers after the Chancellor shelved reforms of IR35 tax rules. Reforms to the system introduced in 2017 and last year led to contractors often being treated as employees for tax purposes and in some cases have been shunned by firms to avoid complex tax rules. Campaigners had long-called for the rules to be overhauled. In last month’s mini-Budget, Kwasi Kwarteng confirmed the reforms would be scrapped, but Mr Hunt U-turned on that promise.
WINNERS BANKERS
THE plan to remove the cap on bankers’ bonuses is another of the mini-Budget policies to survive.
Critics argued uncapped bonuses may lead to the kind of excessive risk-taking that led to the financial crisis of 2008. But the cap has in the past just meant that bankers’ base pay has risen instead.
HOUSE BUYERS
STILL in place is the stamp duty cut, saving the average buyer in England £2,500 in tax on a home purchase.