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Time to start plugging the pandemic-shaped hole

The Government’s magic money tree may still be flowering – but beware of the stealth taxes that are starting to creep in.

Furloughed workers, the self-employed and home buyers will all celebrate the Chancellor’s Spring Budget. Those on furlough have been told the state will continue to bankroll 80pc of their wages until the end of September. The Chancellor also made changes to include 600,000 newly self-employed workers into the grant when they had previously been barred from any support.

Hundreds of thousands of home buyers have been given an extra six months to make the most of the stamp duty holiday, which will start to be tapered from June. It's also good news for those saving towards a deposit. Some of the country's largest banks will offer Government-backed mortgages with 5pc deposits on homes up to 600,000 from next month.

But it’s not all good news. Mr Sunak paved the way for punitive taxes to plug the gaping hole that the pandemic has punched into public finances. Harry Brennan has written about the winners and losers here.

Wealthy pension savers will be hit by an immediate freeze on the “lifetime allowance”, which places a limit on how much savers can put into pension pots tax free. The level will be frozen at 1,073,100 until 2026.

Similar freezes have been placed on the inheritance tax threshold and the annual exempt amount in capital gains tax. Other tax raids include an increase in corporation tax paid on company profits, up to 25pc from April 2023. This will affect up to 229,000 buy-to-let landlords who have chosen to incorporate their properties.

There have been several changes to income tax rules. The 12,500 personal allowance for income tax and the 50,000 threshold for higher rates will rise in April as expected, but they will then be frozen until 2026. This freeze will affect all workers earning more than the personal allowance, and means they won’t benefit from the planned increases.

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In our comments section, Kaz Laing said of ‘Fears for flat prices as cash buyers swoop on cladding discounts from desperate leaseholders’:

In my daughter's case, the freeholder is a housing association and they are unable to pay any costs because of their charitable status. Her waking watch costs 1,500 per flat per month which is more than her mortgage and she can't afford it.

She will also have to pay remedial costs as the builder left out quite a few fire barriers and many of the ones they did bother to put in are installed incorrectly. This scandal is destroying her and thousands like her.

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