The Chancellor delivered the Spring Budget this week, with a key focus on cutting taxes, helping small businesses achieve growth and supporting households.
Taxes are too high. The legacy of Covid and paying down that debt, combined with the war in Ukraine and the Middle East form the backdrop of the tough economic conditions the country finds itself in. The Chancellor has done well to cut the main rate of National Insurance Contributions by 2%, just as he did in the Autumn Statement last year - the rate is now down from 12% to 8%. This will put £900 back in the pocket of the average worker. I would have rather seen a reduction in income tax, as it would have applied to those over the age of 65, but we have at least received a tax cut and that is probably much better than any other party could have offered!
The Chancellor also targeted support for working families by helping parents pay for the costs associated with having children so they can balance their work alongside being a parent. The High Income Child Benefit Charge (HICBC) - paid if you or your partner earn over £50,000 - has been raised to £60,000 impacting 170,000 families. This benefit was in need of reform and whilst the Chancellor has raised the individual threshold now, the plan from 2026 to base the withdrawal of the benefit on family income, rather than individual, seems sensible.
For businesses, the Chancellor listened to the calls from colleagues and I in relation to raising the VAT Threshold. I spoke to the Chancellor back in January and asked for the threshold to be raised to £125,000. So many small businesses cluster around the current £85,000 VAT registration threshold, costing the country hundreds of millions of pounds in economic activity. Although the threshold has not been increased as far as I would have liked it, the £5,000 increase to £90,000 is certainly welcome.
The one area of the Budget that was disappointing was the removal of the Furnished Holiday Lettings (FHL) tax benefits. Whilst I can understand the Chancellor announced these changes to help try and combat the lack of long-term rental properties for local people, this will not do this. Those little cottages in the middle of our wonderful countryside are part of the charm of coming to visit Devon. Trying to get planning permission to turn these properties into residential properties is near impossible! Taking these tax benefits away will instead drive a coach and horses through a really important part of our tourism industry down in Devon. We are so lucky to have a thriving rural local tourism economy.