Experts – Baines Jewitt directors Anne Cowley and Trevor Cook .
PICTURE : TOM BANKS
BUDGET
SQUEEZE
Analysing the winners and losers after the government ’ s latest financial plans O
Like all budgets , chancellor Jeremy Hunt ’ s autumn statement delivered a torrent of economic and financial detail in a very short space of time .
As usual , it was left to experts to sift through the information later and make sense of it all for the rest of us .
Tees Business asked Trevor Cook , director of Stockton accountants Baines Jewitt , one of the largest firms of chartered accountants , business advisers and tax experts on Teesside , to examine the impact and implications of the budget for businesses big and small ...
146 | Tees Business n November 17 , the government undertook the third fiscal statement in as many months , against a backdrop of rising inflation and economic recession . The new budget plan aims to plug a major hole in public finances by increasing taxes and cutting spending .
The threshold at which the additional rate ( top rate ) of Income Tax becomes payable will be lowered from April 6 2023 , reducing from £ 150,000 to £ 125,140 , which is the point at which the personal allowance will have been fully withdrawn . This is a huge climbdown from the minibudget , which included plans for the 45p tax rate to be abolished .
We find that individuals want to limit their income to £ 100,000 if they can , as this avoids the nasty 60 per cent marginal rate of tax trap that applies to income between £ 100,000 and £ 125,140 due to the loss of personal allowances . The basic rate of Income Tax will remain at 20 per cent indefinitely and the proposed cut to 19 per cent will only proceed when economic conditions allow and a change is affordable .
The freezing of thresholds / allowances until 2028 , resulting in them not keeping up with inflation , will mean that individuals are pulled into higher tax brackets .
And with inflation running in excess of 10 per cent , this announcement is therefore likely to be painful and for longer than originally anticipated when