Cormac Marum, Head of Tax at Harwood Hutton, takes a quick break from compiling our main report on yesterday’s Budget to offer his initial reaction to the content and Jeremy Hunt’s performance. Our Budget 2023 Report will be ready to share with you shortly.
Don’t assume that the whole of the Budget is delivered by the Chancellor in his set-piece Commons speech on Budget Day. That is just the show for the cameras and designed to supply the headline quotes for the TV news clips. It contains only that which the Chancellor wants you to learn from the Budget.
This year it was Jeremy Hunt’s first Budget and he put up an entertaining and competent performance as he delivered his hour-long speech stressing how he was helping the Prime Minister meet the three key economic planks of the Government’s Five Goals: Halving inflation; growing the economy; and getting debt falling.
We even had the Chancellor providing us with a handy checklist of his policy agenda all helpfully beginning with the letter E – employment, education, enterprise and everywhere.
But what is the real Budget? It is the wealth of detailed Budget measures contained in all the bumph released the moment the Chancellor sits down. This explains the ‘nuts and bolts’ of the measures being introduced which will find their way into the Finance Bill and eventually pass onto the statute book. This tells you what is actually going to happen and it can paint a very difficult picture to that given by soundbites on the TV news.
One of the top soundbites from the Budget speech was ‘Abolition of the amount workers can accumulate in pensions savings over their lifetime before having to pay tax’.
This policy change designed primarily to stop NHS consultants retiring early was announced by Jeremy Hunt as a great leap forward encouraging those over 50 to return to the workforce by removing one of the grave disincentives to work. No mention in the Budget speech of all the important caveats.
Listening just to Jeremy Hunt, you would have been forgiven for thinking that this announcement could have been only good news. Everyone knows that, on retirement, an individual can take 25% of their pension lump sum tax-free. No mention of that being withdrawn or restricted in the Budget speech.
But turn to the Budget documents, battle through the papers and get to the foot of page 100 and there you find it – the Pension Commencement Lump Sum for those without pension protections is to be capped at its current level.
So, however much those returning NHS consultants manage to put away into their pension schemes once they return to work, they will get not one extra penny tax-free as a lump sum on eventual retirement if they had already hit the current cap. Not such a rosy prospect now? Not quite the sentiment put forward in the Budget speech?
It reminds me of the maxim – what the Chancellor gives with one hand, he takes away with the other. Oh, if only, we could have a one-handed Chancellor!
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