12:37 PM, 17th November 2022, About A year ago 14
The Chancellor of the Exchequer, Jeremy Hunt, has today announced his Stealthy tax threshold increasing budget in a plan to preserve stability, promote growth and protect public services.
Whilst on the face of it not as severe as many predicted, Hunt took great care not to use the words ‘tax rises’ but everyone will be paying more tax – especially landlords.
He told MPs that the country is in recession and the economy will shrink by 1.4% next year. Government forecasters are effectively predicting a shallow but long recession.
The Stamp Duty cuts announced in September will remain to protect the housing industry, but be time-limited, ending on March 31st 2025
While no rent freeze for the Private Rented Sector has been announced, the Chancellor revealed that social housing rent rises will be capped at 7% to save the average tenant £200 next year.
The Chancellor also revealed that the income tax personal allowance threshold will be frozen until 2028.
He told the Commons: “Even after that, we will still have the most generous set of tax-free allowances of any G7 country.”
That means millions of people will end up paying more in tax because they will earn more – and more people will move into higher tax brackets.
The Government had previously frozen the thresholds until 2026.
Economists say that the freezing of allowances equates to a ‘stealth tax’ because it effectively adds to the headline rate of income tax.
The threshold for Inheritance Tax was previously set by Rishi Sunak when he was Chancellor at £325,000 until April 2026. Now Mr Hunt has extended this until April 2028.
Some tax experts have calculated that workers will now be paying a greater proportion of our wages in tax – and this is at the highest ratio in 70 years.
The Chancellor’s announcement will effectively mean that income tax over the next five years will rise by 1% of GDP
Surprisingly, Universal Credit allowances will increase in line with inflation by 10.1%. However, an additional 600,000 claimants will be actively encouraged back to work or to increase their earnings.
The Pensions Triple Lock has also been protected and pensions will also increase at the same 10.1%
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