Budget Take Two: Will Election Promises Be Made A Reality?

Income tax

Income tax (along with National Insurance and VAT) is to be the beneficiary of the tax lock, so there will be no increases in tax rates over the course of this parliament. The most notable point of this legislation is what it leaves out, so there is no commitment to maintaining or raising the income tax thresholds. With the Government committed to raising the basic rate threshold, taxpayers in the higher bands should not be expecting any positive moves in that regard soon.

Pension tax relief

The problem with committing to not raising the headline rates of tax in an era of continuing austerity is that it leaves the Government with the question of how to increase tax revenues. The answer is likely to be the continued restrictions on tax relief for contributions for higher rate taxpayers, with those earning more than £150,000 being progressively restricted to an annual allowance of £10,000. Top rate taxpayers would be well advised to consider whether