Financial Planners have shared their predictions for what will be included in today’s mini-budget from Chancellor Kwasi Kwarteng.
Mr Kwarteng is expected to deliver his mini budget in the House of Commons sometime after 9.30 am today.
On the eve of the Budget yesterday he confirmed he would scrap the rise in National Insurance, a move widely expected.
In the budget today he will set out his and Prime Minister Liz Truss’ vision for supporting the UK through the cost-of-living crisis, alongside boosts for business growth and investment.
The mini-budget was scheduled following the change of leadership and new Chancellor earlier this month.
Rachael Griffin, tax and Financial Planning expert at Quilter, said Chancellor Kwarteng faces a difficult task to deliver on the promises Ms Truss made during her leadership campaign.
She said: “Chancellor Kwasi Kwarteng faces a tricky balancing act in terms of bringing the claims Truss made during her leadership campaign to fruition while providing appropriate support to the British public to help them through the ever-worsening cost of living crisis.
“This may be billed a ‘mini’ budget, but the costs could be vast, with the energy price freeze leaving government coffers beholden to future volatility in energy prices.
“The cards appear to be already on the table. Truss and Kwarteng are ‘going for growth’ with billions in new borrowing to pay for tax cuts, including a reversal of the National Insurance rise, cancellation of the scheduled increase in Corporation Tax, and scrapping green levies on energy bills.
Ms Truss has yet to put forward any detail proposals for how the planned social care reforms will be paid for within the increase in national insurance.
A U-turn on the NI increases would mean someone earning £50,000 a year would see an extra £40 in their pocket each month, £467 extra annually.
Among other measures Ms Griffin expects to see announced by the new Chancellor include scrapping green levies.
Sian Steele, head of tax at wealth manager and Financial Planner Evelyn Partners, said significant tax savings should be seen by the highest earners.
Tony Wickenden, managing director at Technical Connection – part of wealth manager St James’s Place, also expects to see the Chancellor to reverse the planned increased to Corporation Tax, which is currently due to increase for profits over £50,000 from April 2023.
He also expects to see potential reforms to personal allowances.
He said: “Another proposal to help family finances that might emerge relates to the transfer of personal allowances between married couples and civil partners. Currently, where an individual does not have enough income to fully use their personal tax allowance (currently £12,570), they can elect to transfer £1,260 of their allowance to their spouse/civil partner, provided that spouse/partner pays no more than basic rate.
“Truss has proposed that the full allowance should be transferable to help couples where one spouse is the sole earner. Such a move could be costly though– the current 10% of personal allowance version costs about £600m a year.”
He also theorised that we could see a cut in Stamp Duty, either generally or just for first time buyers.
Alastair Black, head of industry change at Abrdn, said the emergency budget will have implications for financial advisers.
He said: “Liz Truss has been very clear about her intention to reform certain taxes and allowances – from scrapping the health and social care levy, to enhancing the transferable marriage allowance to the level of the personal allowance.
“Any new legislation and tax regimes mean disruption, which creates new challenges from a planning point of view. Consistency means that advice can be confidently given, and strategies confidently executed. Advisers must anticipate the need to make changes to clients’ plans following the emergency budget, including if clients want to help family members with their financial challenges. This will mean new opportunities to demonstrate the value of advice.”
