Budget Comment: George Osborne plays the EU Generation Game
- Credit: Archant
Danny Clifford, tax and trust partner at Ensors Chartered Accountants, delivers his verdict on the Budget
The Chancellor seemed to be at great pains to make it clear that he was selling this as a “Budget for the Next Generation”.
To the cynic that might be seen as a gentle way of saying “there is nothing for you here so don’t even ask”; however, by the end of his speech, I was left wondering whether he had written the “next generation” slogan for a different budget – one that in the end was not presented.
The background to this Budget included some rather worrying downgrades to the UK economic growth forecast and debt reduction targets that the Chancellor has missed by a country mile. In short, things are far from rosy in the British economic garden. And yet, where was all the bad news? Where were the tax hikes, the increased duties? There were some of course, the much anticipated “sugar tax” will be introduced from 2018, though Mr Osborne stressed this would be a tax on the companies that they “may choose to pass on to the consumer” – his way of distancing himself from that bad news.
There were also further large cuts announced to public sector budgets, albeit with no indication of what those might be. So although the under 40s are to be incentivised to save in a “Lifetime ISA”, it was two tax reductions that caught the eye: Corporation Tax will be just 17% by 2020 and Capital Gains Tax will fall from 28% to 20%, or 18% to 10% for a basic rate taxpayer (but not if you’re selling a second home or investment residential property).
It seems strange that he did not try to generate rather more mileage from what are very substantial tax reductions but instead chose to brand it as a “Budget for the Next Generation”.
So to me, this Budget seemed rather schizophrenic – headline tax reductions set against a worsening economic background. It is possible that the reason for this is that there was, in a previous draft, rather more bad news. It is well publicised, for example, that there were to be substantial changes to pensions, in particular that the higher rate tax relief on contributions might be withdrawn, but that these plans were ditched last week – or possibly just delayed?
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My suspicion is that the Chancellor was under pressure to ensure that Budget 2016 did not contain “bad news” for the masses who are shortly to vote in the EU Referendum. If that suspicion is proved correct, I fear that any relief felt at what was a rather benign Budget may be short-lived and that the Autumn Statement may have more than a touch of cold, hard winter about it.