Budgets create plenty of headlines. What really matters is what the announcements mean for you and your plans.
In the lead up to the Chancellor of the Exchequer John Healey’s first Autumn Budget, we were reminded that the cost-of-living crisis is not felt evenly. Those with the lowest incomes and most fragile finances have been most severely impacted. Energy costs (for heating and transport) have remained high as the conflicts in Ukraine and the Middle East continue. This Budget included targeted measures for individuals, and sectors of the economy, intended to provide some relief as we move into another challenging winter.
Alongside measures intended to provide ‘breathing space’, the Budget also announced a number of measures aimed at encouraging growth, including entrepreneurship incentives and further devolution of decision-making to the regions. Together, these measures reflect the Budget’s stated theme of providing ‘fresh hope for the future’.
The Chancellor said that this was a ‘fully funded’ budget. Some of this funding is likely to come from tax changes announced at previous budgets (e.g. bringing most unused pensions into scope for Inheritance Tax from April 2027). Rachel Reeves previously announced increases in the rates of Income Tax applying to savings and property income from April 2027. The Budget announced a further increase, taking those rates to 24%, 44% and 49% from 6 April 2027.
What the Budget Means
The key question is, how does it impact you? That’s not something that a newspaper article or blog post can answer for you. Having a clear understanding of the facts is an important starting point for making informed decisions. To help give you this foundation, we’ve prepared an overview:
People, Planet and Profit
As a Certified B-Corporation, we see the world through our ‘Three P Lens’: People, Planet and Profit. Here, we have used that lens to highlight some of the potential social, environmental and financial implications of the Budget. Some measures involve trade-offs, with potential benefits in one area and costs in another.
People. Several of the cost-of-living measures are targeted towards people on lower or less secure incomes. Alongside the £100 Household Energy Payment for eligible households, we noted increases to the National Living Wage, tax support for pensioners with no other income, and further measures to address rough sleeping.
Planet. The measures affecting Planet present a mixed picture. There will be investment in renewable and low-carbon infrastructure, but this will not necessarily mean a greener grid. Additional clean energy generation will also need to help lower bills before it is added to the grid. The transition to electric vehicles could be supported by investment in lower-powered public charging, particularly for people without a driveway. However, the new mileage-based Electric Vehicle Excise Duty adds cost and complexity, which could influence decisions about switching to an electric vehicle.
Profit. Our analysis of the Budget document identified more measures relating to Profit than either of our other two themes, although their effects pull in different directions. The new Founders’ Relief provides a tax incentive for qualifying founders of certain high-growth businesses, but this sits alongside a reduction in the lifetime limit for Business Asset Disposal Relief. Similarly, individuals were encouraged to invest for the first time through the prospect of new ISA incentives, while tax rates on savings and property income were increased further.
What Happens Next
The Budget will affect everyone differently, but life is about more than money and taxes. Money matters, but life matters more.
Download a copy of our Budget overview for a summary of the key changes.
This document is distributed for educational purposes only. Information contained herein has been obtained from sources believed to be reliable but is not guaranteed and any proposals may be subject to amendment before the Finance Act receives Royal Assent. You are recommended to seek competent professional advice before taking any action. The contents of this guide do not constitute personal advice.