Chancellor adopts ‘up-and-under approach’, but impact remains up in the air

By Chris Humphreys, tax partner at BHP

The late, great rugby union commentator, Bill Maclaren, used to refer to it as an “up and under” or “Garry Owen”, that moment at the end of game where the fly half kicked the ball deep and high into the other teams half hoping to disrupt the opposition players and make “something”, or indeed, “anything” happen. 

And in many ways, it’s a great way to describe Jeremy Hunt’s second Spring Budget. Delivered at a time when the Government’s approval rating and position in the polls is the lowest it’s been since 1997, it’s the ultimate up and under as the Chancellor tries to balance fiscal restrictions and poorer economic data with measures focused on delivering growth reducing the tax burden.

Some of the measures were largely as expected. The further reduction of 2% in National Insurance Rates for the employed and self-employed was keenly anticipated, although it is bizarre that National Insurance is now referred to as a second tax on earned income!

It will, however, mean that when considered with the Autumn Statement measures an average employed worker will be £900 better off each year and an average self -employed worker £650.

Similarly, as always fuel duty was frozen, in fact it’s not moved for 11 years. Why the Government doesn’t just announce it’s permanently freezing this, I don’t know.

But other measures announced today showed some depth of strategic and forward thinking which may start to move the electoral dial for voters. These included: 

• The abolition of non-dom status – in reality a labour initiative but will raise £2.7bn over the forecast period.
• The removal of tax reliefs for furnished holiday lettings – hopefully freeing up the stock of residential properties but also increasing the fiscal headroom.
• Reform of the High-Income Benefit Charge so that it is as assessed on a household basis with immediate support for working families by increasing the threshold to £60,000.
• Reduction of the capital gains tax rate on property from 28% to 24%, firing up the residential property market from April 2024.
• The increase in the VAT registration threshold to £90,000 taking 28,000 small businesses out of having to pay VAT altogether.

Boldly titled a ‘Long Term Budget for Growth’ there’s lots to admire from a relatively safe half back. But only time will tell whether this particular “up and under” is strong enough to see this chancellor see its long term effects.