ICAS: Autumn Budget impact will be felt by all

MEDIA STATEMENT: Commenting on what was perhaps the most highly anticipated Autumn Budget announcement in recent history, the Institute of Chartered Accountants of Scotland (ICAS) said that the impacts will be felt across the economy, by businesses and earners alike.

Bruce Cartwright CA, ICAS CEO said:  

“On first reading, this doesn’t look like a budget for growing the economy or encouraging business investment.  

“Freezing the personal income tax thresholds until 2030-31 may be an easy win for the Chancellor, but it’s not transparent to taxpayers and ultimately takes money out of everyone's pocket. This is because more earners will be dragged into higher tax bands and pulled into the system at the lower level. The effects of this will hit people on lower middle incomes much harder than those at the very top of the pay scale 

“Reducing the purchasing power of consumers via a stealth tax is also detrimental to growth and businesses will feel the impact of people having less in their wallets. Increasing tax rates rather than freezing thresholds would at least be a more transparent way of increasing additional revenue for public services. 

“It’s good to see that there are no significant changes to corporation tax, which offers some stability to the business community but does little to encourage investment. This coupled with increasing costs through the limiting of pension salary sacrifice, above inflation minimum wage increases and vehicle excise duty changes will all cost both individuals and business, hindering economic growth. Fiscal drag and stealth taxation will impact virtually all taxpayers for many years to come.  

“On salary sacrifice measures, the proposal to introduce a new cap for national insurance of £2k for pension contributions will increase businesses costs of employing people. It will also introduce more admin burden for businesses. This measure will also lead to uncertainty for pension savers, discourage saving, and make it harder for people to achieve the pension they need.   

“The new proposals for a council tax surcharge in England and Wales for properties valued at over £2 million will almost certainly mean that discussion on property taxation will be reignited in Scotland. There have been promises to reform council tax for many years and although the Scottish Government is unlikely to bring forward new proposals before the May elections, this move may make it harder for them not to act in the future.  

“We’ve long called for a transparent, simpler, and long-term tax system. This budget again introduces a raft of small changes and continues to tinker with the UK’s hugely complicated tax system. This not only increases complexity but also introduces unpredictability in the way people and businesses may react.”