On the 22nd November the first official Autumn Budget for over 20 years will take place. It is fair to say that there is greater uncertainty both politically and economically than for many years. With the Bank of England likely to raise interest rates this month and the Brexit negotiations progressing in an unforeseeable manner, it is more difficult than usual to predict how the Budget will turn out.
Inevitably in the run up to the budget there are significant demands being made for extra resources in terms of housing, security, defence and of course the NHS. Some of the savings which the Government has planned in terms of social security may get delayed if there are changes in the roll out of Universal Credit. Set against this, the public finances have been performing better than anticipated which would appear to give the Chancellor some room for easing those pressures whilst still achieving his Budget targets.
If the Chancellor needs to raise money there are some obvious targets. Pensions tax relief, slowing down the growth in personal allowances and the higher tax band threshold are amongst the options that are often discussed. We may also see a different tactic in raising the NIC yield from the self-employed, potentially the extension of employer’s NIC rather than raising class 4 NIC. However, with only a small majority in the House of Commons, and that dependent on the DUP, the political room for manoeuvre in terms of unpopular measures is very limited.
Therefore, tax raising measures may generally be technical ones buried in the legislation which do not raise political controversy. The Budget reality may only be revealed when the third Finance Bill of 2017 is published in December.
