With inflation on the rise again at 3.5%, John Healey framed his first budget as offering ‘breathing space’ with longer-term reform to come via Andy Burnham’s forthcoming 10 Year Plan and the Spending Review due in 2027, which will set out how Britain plans to meet it’s NATO spending commitments by 2030, an issue the Chancellor previously resigned over.   

So, what will give you room to breathe ?  

• A new Pension Tax Allowance to ensure pensioners do not pay tax on income up to the full UK State Pension. 

• National Minimum/Living Wage increased by 3.9% for 2.3M of the lowest paid workers.  

• VAT cut on electricity to be extended to July, saving ‘£50 off the annual price cap’ 

• £100 ‘household energy payment’ this winter for households in council tax bands A-D 

• Gas standing charges to be removed ‘from next year’.  

• 5p fuel duty cut extended until next July. 

• Suspending tariffs on over 100 supermarket products, including gerkins as we know.  

• 55p mileage rate for first 10,000 miles made permanent, and the higher rate increased to 35p.  

• Cliff edge removed for the loss of Carer’s allowance.  

The Chancellor was keen to point out that he is keeping to the ‘fiscal rules’ set by his predecessor, with spending fully funded including the use of the available headroom, which is set to fall from £24bn to £15bn by 2029/30 to absorb increases in the cost of living.  

In addition: 

• A surcharge of 3% on Bank Profits for 15 Months from January 2027 was less than expected and saw Bank Shares rise following the announcement.  

• HMRC given more power to make sure people pay the tax they owe and close tax loopholes. 

• A reduction in Business Asset Disposal Relief from £1M to £500,000, with no ill effects for 3 out of 4 claimants.  

• The adjusted triple lock on the State Pension will save a further £15bn off the benefits bill each year by 2030.  

As well as tax increases, the Chancellor was also keen to talk up his plans to help the economy grow.  

His opening claim that the OBR Growth Forecast has been revised up this year marked a positive start, but he forgot to mention the revised cut in the forecast for 2027.  

There was a raft of announcements to stimulate business growth and investment, with 70,000 businesses being taken out of business rates through increased levels of relief, and all business rates be retained locally by the end of the decade being amongst a number of announcements to support the devolution of power to Mayors and local authorities.    

Relief was also given to savers with the proposed reduction in the Cash ISA limit of £20,000 being withdrawn.  

For the customary ‘rabbit out of a hat’ ending we saw some support for first time buyers announced with a new 1st time buyer ISA to replace the Lifetime ISA, and plans to scrap the existing LISA penalty if your home costs more than the current limit.   

And finally a government backed equity-loan scheme worth £4.7bn to be open to first time buyers ‘who don’t have the bank of mum and dad behind them’. 

Contact us on 0330 320 9280, email: info@cravenstreetwealth.com or complete our online enquiry form to discuss how government policy could impact your financial plans. 

The content of this article is for information only and does not constitute formal financial advice. This material is for general information only and does not constitute investment, tax, legal or other forms of advice. 

References to legislation and tax is based on our understanding of United Kingdom law and HM Revenue & Customs practice at the date of publication. These may be subject to change in the future. Tax rates and reliefs may be altered. The value of tax reliefs to the investor depends on their financial circumstances. No guarantees are given regarding the effectiveness of any arrangements entered into on the basis of these comments. 

You should not rely on this information to make, or refrain from making any decisions. Always obtain independent, professional advice for your own particular situation. 

Craven Street Financial Planning Limited is authorised and regulated by the Financial Conduct Authority (FCA).