What lies in store in Jeremy Hunt’s red box?

Chris Humphreys is Tax Partner at accountants BHP.

Purdah – a Hindustani word in origin and referring literally to a curtain or veil but used in a political arena to describe the period immediately before a politically sensitive event such as an election or budget. Traditionally this means there are tight restrictions on communications, resulting in little being shared about what a Budget may or may not hold.

Yet eight days before the Spring Budget and once again the media is full of political manoeuvring, machinations, and predictions about what the Chancellor will say on 6 March.

Call me cynical but times have changed, and it seems to me that the Government and indeed opposition parties are now using the media as a litmus test as to the public perception and reaction to proposed measures. For proof, just look to the recent government announcement that double-cab pick-ups are to be taxed as company cars, only to be reversed days later following an adverse reaction by the farming Ccommunity.

Despite this cynicism, the March Budget 2024 may actually be one of the most important of recent times:

  • It will be politically driven, as it may well be the last chance this Government has to set out its pre-election stall and generate momentum.
  • It’s being delivered at a time when inflation has fallen to 4% and borrowing stands at £10 billion less than expected, resulting in a £13 billion war-chest for the Chancellor.
  • There is increased pressure on Mr Hunt to spend some of this war-chest in supporting business growth following the announcement that UK PLC was officially in recession last year.

So, what possible measures could this result in being included in the red box on 6 March?

  • A reduction in the headline rate of Corporation Tax.
  • Targeted tax incentives to inward investors.
  • A speculative reduction in the basic rate of Income Tax by one or two per cent following promises made by Rishi Sunak in 2022.
  • A move to undo the freezing of tax thresholds.
  • The abolition or reform of Inheritance Tax.

Obviously, the upcoming week will see plenty more speculation and media briefing – rightly or wrongly – but what’s for certain is that by 2pm on 6 March there will be some news.

If you want to find out, in more depth, about what the Chancellor’s announcement means, BHP will be hosting our usual post-Budget event on 7 March at The Mowbray in Sheffield, and we would like to see you there.

In the meantime, be careful of the electoral spin and remember, last Autumn’s Statement was described as the biggest tax give-away in modern political history. Have you felt the benefit yet?