Any budget in an election year is generally a tax giveaway designed to persuade voters to retain the current party in power. Forget the idea that it’s part of a fiscal masterplan; it’s all about the ballot box. But the current Chancellor, Jeremy Hunt, was in a tricky place, still trying to pay for the extensive covid giveaways of his predecessors and deal with above-target inflation. His hands were somewhat tied, but he gave it a whirl.

The headline handout was a 2% reduction in employee national insurance (NI) only a few months after a similar reduction in his Autumn Statement. It’s down from 12% last October to 8% from the start of the new tax year in April. It may sound generous, but it doesn’t help old‘uns like me and the millions who have reached the age where they are exempt from paying it. There’s no respite for employers either, who are still faced with a hefty 13.8% on their salary bill. No votes from either of those groups then!

An opportunity missed

Mr Hunt had options that he ignored. A 1% cut in income tax would have cost him less than a 2% reduction in NI and appealed to more people. But his biggest omission was not to unfreeze the thresholds at which you start to pay tax (your personal allowance) or at which you hit higher rate tax. Moving these thresholds in line with inflation would have been the most popular of all but would, of course, have been the most expensive. An opportunity missed.

He did at least attempt to address the broken system of High Interest Child Benefit Charge, whereby you have to start to repay benefits once one partner in a household earns more than £50,000 per year. Mr Hunt announced that it would be assessed on both household incomes, a much fairer method, but it will be 2026 before it’s in place. In the meantime, the threshold has been increased to £60,000 and the rate of recovery is halved. A welcome gesture but only a token for the next couple of years.

Talking of tokens, the point at which you have to register for VAT has gone up from £85,000 to £90,000. It was hardly worth doing and will make no appreciable difference to tax take or to those earning around that level of annual income. Doubling the thresholds would have taken thousands of self-employed people and small businesses out of a most time consuming and complex tax to administer. Another opportunity missed.

The Chancellor confirmed his attacks on non-domiciled individuals and property landlords... well, at least to some degree. There was a surprise – a favourable one – with a 4% reduction in the rate of Capital Gains Tax on sales of residential properties. Maybe that’s meant to be the vote grabber?

But don’t despair, we’re in 2024 not 1974. Fifty years ago, basic rate income tax was 33% and the higher rate was an unthinkable 83%. Companies paid tax at a staggering 52% – over half of their profits went to the tax man compared to a quarter or less today. And inflation was over 20%. Maybe we’re not so badly off after all?