The
The Chancellor,
What we are likely to expect from the Spring Budget Inheritance tax reform Fresh help for first time buyers Income tax cut Fuel duty cut What we would like to see Lifetime ISA reform A bigger ISA allowance Dividend tax and capital gains tax threshold cuts halted
While reams of discarded festive paper are heading for the recycling bins,
What we are likely to expect from the Spring Budget Inheritance tax Inheritance tax cuts now look set to be firmly back on the table, with reports now suggesting the charge could be axed. This will again draw criticism that this will favour those who are better off at a time when people continue to struggle through the cost-of-living crisis. However, it is certainly a tax in need of reform, and it is highly likely to be targeted for upheaval in March.
Nil rate bands and gifting thresholds have remained untouched for years. At the same time, theres been a rapid growth in house prices which has meant that many people who may not have expected to be liable for IHT now are. This year, were expected to pay 7.6 billion in IHT, but with the same thresholds and rate in place, by the end of the 2028/29 tax year, its forecast to be 9.8 billion.
While the government is mulling axing the duty, its worth bearing in mind that even increasing nil rate bands and revisiting gifting allowances would play a major part in freeing many caught in the tax net and would enable more people to pass money down the generations, supporting their family members when they need it most.
Help for first time buyers With more and more younger buyers being priced out of the market, as borrowing costs have soared and house prices have remained high, the number of first-time mortgages is set to hit a ten-year low next year. Its little surprise that help for those people who are unable to get onto the first rung of the housing ladder is reported to be on the governments wish list. New offers for prospective homebuyers will be aimed at boosting Conservative support among younger voters. A new version of the Help to Buy scheme may be resurrected or efforts made to enable more potential buyers to access long term mortgages with low deposits, similar to initiatives in the US. Income tax cut
Fuel duty cut Another nugget from the OBR report in November was the fact that staying within fiscal rules means fuel duty will need to rise next year, and the temporary 5p cut in fuel duty will need to be reversed. This would be a blow for motorists, who have seen prices come down from the peak in summer 2022, but are still paying significantly more to power their cars than before the pandemic. It would also be a difficult measure to wear politically, because fuel duty has been frozen since 2011, and motorists have come to feel the
What we want to see Lifetime ISA reform
Data from the HL Savings and Resilience Barometer shows expanding accessto households agedbetween 40 and 55 could help 680,000 householdswith a self-employed worker who pays the basic rate of tax. Thereduction of the penalty could also help 540,000 households aged between 18 and 39with a self-employed worker who pays the basic rate of tax.
We would also like to see the Lifetime ISA allowance of 4,000 to be separate, and in addition to, the 20,000 for ISAs. This would help separate these products and clear up the single biggest misunderstanding about LISAs. It would also boost incentives to invest, including for those who are struggling to save up for a deposit to get onto the housing ladder.
A bigger ISA allowance
Dividend tax and capital gains tax threshold cuts halted
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