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With the Budget scheduled for 30th October, speculation is mounting regarding the changes that may be announced. Both the Chancellor and the Prime Minister have made remarks suggesting that the Budget will involve “difficult decisions”.
Shortly after taking office, the Chancellor reported that there was a £22bn “black hole” in public finances inherited from the previous government. However, the BBC recently cited sources indicating that £40bn is actually required to prevent real-terms cuts to government departments.
There has also been significant discussion about boosting growth in the UK economy, with the recent International Investment Summit aiming to attract foreign investment into the UK.
Will Employers’ National Insurance increase?
While Labour’s manifesto pledged no tax increases for workers, no such promise was made for employers. Employers’ National Insurance (NI) is a tax paid by employers based on an employee’s gross pay, meaning it is a cost to employers rather than directly affecting employees.
The Prime Minister skillfully avoided answering whether the manifesto pledge also applied to Employers’ NI during an interview last week. Chancellor Rachel Reeves also confirmed that the pledge not to increase NI for working people referred to the employee portion, not the employer portion.
Therefore, it seems likely that the government is considering an increase in Employers’ NI as a potential tax-raising measure.
What else could change?
By signalling this information in advance, the government may be preparing the public for a tax rise, potentially reducing the impact of the news if the actual increase is less than anticipated.
Furthermore, by focusing on an obvious tax hike, such as Employers’ NI, other welfare cuts or tax increases could slip through with less public attention.
Other areas that are expected to be addressed in the Budget include capital gains tax, inheritance tax, fuel duty, pension taxation, non-domiciled tax status, and potentially a gambling tax.
Once the Budget is announced, we will keep you informed of any changes. If you have any concerns about how the Budget might affect you, please feel free to get in touch, and we will be happy to assist.
