MUSINGS

So, as we all resurface and life returns to some form of normality, we are learning that the Bank of England considers we may already be in a recession. In moves to battle growing inflation, the government has stated that it will allow us to hold onto more of our earnings by reversing the increase in National Insurance.

As we evaluate the mini budget, it is now confirmed that the planned increase in tax paid by companies on their profits will be scrapped.

Other cuts in taxes include the threshold before stamp duty is paid on a property is now £250,000 whilst the basic rate of income tax has been cut to 19p, and the 45p top rate of tax will be scrapped. The new Chancellor has also ended the cap on banker’s bonuses. Furthermore there are plans to boost economic growth by creating low-tax zones across the UK. The slight drawback to all this is that these measures could cost us upwards of £30bn.

From November 6th, last April’s tax rise of 1.25% will be reversed, while funding for health and social care will be taken from general taxation. These changes are expected to save around 28 million people a yearly average of £330.

As our new chancellor, Kwasi Kwarteng put forward his growth plan in a statement to Parliament, he is considered bold by his colleagues, with an inner confidence and unorthodox views. It is believed, as a Chancellor, he will annihilate previous Treasury thinking by cutting taxes without any spending cuts, so this is all to be funded by increased borrowing.

It is a brave fiscal experiment and the results will need to be fast so that we can all see strong economic growth and quickly. It is certainly a bold and confident move but recovery is also about the markets’ confidence as well as public confidence in the revised taxation plans.

To say the last few years have been financially challenging is an understatement, with policy changes, rising living costs and a turbulent economy in general, leaving it tough for any of us to budget or plan ahead.

The best advice we seem to hear is that everyone should prepare and plan as best as possible by prioritising essential bills. Putting aside a savings buffer with a separate, small amount dedicated to Christmas this year is also highly recommended by many financial experts. Sensible intentions we probably all need to consider for the longer term.