FT experts answer your Budget questions
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From national insurance tax cuts to an extension on child benefits and a shake-up of the “non-dom” tax regime chancellor Jeremy Hunt unveiled the Budget for 2024.
The Financial Times convened a panel of experts to answer your questions about how the measures might affect you.
Claer Barrett, the FT’s consumer editor, joined Chris Giles, the FT’s economics commentator, and Nimesh Shah, chief executive of Blick Rothenberg, to reply to your comments in an online Q&A.
The Q&A is now closed but here are the highlights:
FT reader, Richard: If the FT editors were chancellor what would they do?
Nimesh Shah: This would have been my Budget 2024 wish list — I accept that not all of this would be possible within the fiscal constraints but our personal tax system needs serious reform. It is too complicated and creates these bizarre marginal rate spikes. I would also:
Abolish the high income child benefit charge, where a family starts to lose their entitlement to child benefit when one of the couple earns more than £50,000
Remove the £100,000 cliff edge where you lose your entitlement to tax-free childcare
Reinstate the personal allowance for everyone, thus removing the 62% effective rate of tax on earnings between £100,000 and £125,140
Abolish the tapered £60,000 pensions annual allowance when you have adjusted income of more than £260,000, and
Most importantly, cancel frozen tax allowances and thresholds and enshrine in legislation to increase these in line annually with inflation.
FT reader, CremeBrullle: Will the new British Isa just cause people to reallocate their existing Isas rather than generating new inflows into UK equities?
Chris Giles: The government consultation is very vague on the definition of a UK company (probably companies listed on UK trading platforms) and collective UK equity investments. It looks like the government is intending to go down the old PEP route.
Since ordinary Isas are easier and less constrained, this is a policy only for individuals with more than £20,000 a year to invest in Isas.
Ragama: In any Budget there are winners and losers, especially pre-election as the government looks to lock in votes. Who is likely to benefit the most and who will be losing out? Realistically, not idealistically.
Chris Giles: This was a Budget that gave a modest boost to the incomes of those in work, paid for by some relatively lucky forecast changes Hunt received and the chancellor’s decision to run less sustainable public finances than in November. That is an accurate and short summary. I doubt it will have a large electoral effect.
FT reader, Dead Ringa: Which tempting and untapped tax opportunities are left to Starmer’s much anticipated incoming government?
Nimesh Shah: The short answer is that there isn’t much left for a new Starmer Labour government. The most significant move by Jeremy Hunt in today’s Budget was to abolish the non-dom tax regime — this was a key Labour tax pledge and earmarked to pay for an additional 7,500 doctors and 10,000 nurses and midwives. Labour’s hands are going to be tied around this, because the government has made its move.
History suggests that the first Budget by a new government will have some bad news — looking at where we are, the room for manoeuvre for Labour appears very limited. There would need to be increases to income tax, national insurance or VAT to raise the funds that would be needed. Labour may need to think about introducing completely new taxes — a wealth tax has been previously talked about, but new taxes are very difficult and costly to introduce, and there will be a time lag on when you start seeing the money coming in.
FT reader, JBond007: Was there anything announced for first time property buyers?
Claer Barrett: Nothing — other than reiterating house building targets — and no confirmation of the 99 per cent mortgage scheme in the Budget documents either.
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