With the Budget coming on 30th October, speculation is increasing on what changes will be announced. The Chancellor and the Prime Minister have made comments to indicate that the Budget will bring “difficult decisions”.
The Chancellor reported shortly after taking office that there was a £22bn “black hole” in public spending inherited from the previous government. The BBC reported last week that their sources indicated that actually £40bn is needed to avoid real-terms cuts to departments.
There has also been much talk about driving growth in the UK economy, with the International Investment Summit recently aiming to attract investment to the UK.
Will Employers NI increase?
While Labour’s manifesto promised no increases in taxes to workers, the same promise wasn’t made to employers. Employers National Insurance (NI) is the element of national insurance paid by employers based on an employee’s gross pay. It is therefore a tax on employers that isn’t directly felt by employees.
The Prime Minister neatly sidestepped questions in an interview last week about whether the manifesto promise included employers NI. Chancellor Rachel Reeves also confirmed last week that the election pledge not to increase NI for working people related to the employee element rather than the employer element.
Therefore, it looks as though the government are considering this as an option to raise taxes.
What else could change?
Other areas that seem likely to receive attention in the Budget could include capital gains tax, inheritance tax, fuel duty, and pension taxation. non-domiciled tax status and possibly a gambling tax.
Once the Budget is announced we will keep you updated on the changes. If you have any concerns about how the Budget might affect you, please feel free to get in touch at any time and we will be happy to help you.
A surprising drop in inflation for September
The Office for National Statistics (ONS) have reported that their measure for inflation (Consumer Prices Index) fell to 1.7% for September. This is an unexpected reduction and is the lowest inflation has been in more than three years.
Drops in airfares and petrol were the main reasons for the reduction. The Bank of England targets 2% inflation, so this reduction may allow them to cut interest rates further when they meet in November. There is also some expectation that there could now be a second rate cut in December.
The September inflation figure is an important one since it’s normally used to set how much many benefits increase next April. These include Universal Credit, disability benefits, and carer’s allowance. Lower inflation may lead to lower increases in these allowances.
The drop in inflation may be temporary though, as energy prices increased in October, which may swing the picture once again.
Chancellor reveals new investment bodies to boost UK growth
In her final speech at the International Investment Summit last week, Chancellor Rachel Reeves announced two major initiatives aimed at driving long-term investment in the UK. These moves are designed to create more high-skilled jobs and support growing industries across the country.
New National Wealth Fund
Reeves revealed that the UK Infrastructure Bank will now operate as the National Wealth Fund (NWF).
With a budget of £27.8 billion, the NWF will focus on attracting private investment into key sectors like clean energy, green hydrogen, and carbon capture. The goal is to accelerate the UK’s transition to a greener economy while creating jobs and growth opportunities.
British Growth Partnership
The Chancellor also introduced the British Growth Partnership as part of the British Business Bank (BBB).
This initiative aims to create a new way for BBB and institutional investors to invest together in innovative companies. The BBB plans to start investing through this programme by the end of 2025.
What it means for businesses
These new bodies could bring fresh funding opportunities for businesses. However, with timelines stretching into 2025, it might take a little time before investments start flowing. Businesses should stay informed as these initiatives develop.
Get in touch
For more information, please don’t hesitate to contact PK Group via welcome@pkgroup.co.uk or +44 (0)20 8334 9953
