EXCLUSIVE: An expert has shared what announcements could be the worst to come out of the budget on Wednesday and what they could mean for you.
Rachel Reeves is the first female chancellor (Image: Getty Images / Wilson Wright)
This Wednesday, Rachel Reeves will announce one of the most anticipated budgets in recent years.
It will be the first Labour budget in 14 years and rumours are swirling around what could be announced.
Neil Lancaster, private client tax partner at Wilson Wright, told Express.co.uk what announcements could be the worst for Britain.
He said: “In the context of public finances supposedly having a deficit of anywhere between 22 and 40 billion, the number seems to increase every week at the moment, is to be expected.
“We are borrowing far more than we projected, and far more than last year. The Office of Budget Responsibility is going to have to press the government very hard for more savings because the interest costs on our debt are going up. So it’s creating a very difficult environment.
The announcement is one of the most highly anticipated budgets in recent years (Image: Getty Images)
“We’ve now had two years where the majority of people in this country have no certainty in the tax regime that this country has. So we’ve got more than just a tax problem now, a fiscal problem, we’ve got a psychological problem in that people feel that the country is closed for business.”
“Unless they deal with this in the budget, not only with balancing the books, but also restoring confidence of people in this country, and businesses, but also investors internationally, then this budget will not be considered a success.”
Mr Lancaster said one of the worst things that could be announced is freezing allowances. He said: “So we’re hearing more about this concept of a fiscal drag which occurs when you freeze the personal income tax allowances, or capital gains exemptions, or your inheritance tax.
“But obviously, with inflation, wages are growing each year. So in theory, as pensioners’ pensions drawdowns increase, and as individuals’ wages increase, more lower paid workers are being brought into tax in the first place. That is really bad, because it means that people are almost getting poorer without realising it, and it’s having a really big impact continually on living standards in this country.”
Rachel Reeves will announce the budget on Wednesday 30 October (Image: Getty Images)
Mr Lancaster went on to say that another element of the budget which is worrying a lot of people is a potential increase in capital gains tax.
He said: “The abolition of business asset disposal relief, which is the relief whereby you get your first million of capital gains taxed at 10% if you sell your business, would create a lot of anxiety. We have the highest effective tax rates that we’ve ever had since World War II now, so my clients already feel like they’re being squeezed.
Mr Lancaster said one final element of the budget that could be announced is removing business property relief and agricultural property relief through inheritance tax.
He said: “There’s a very good reason as to why these reliefs exist, and that is for continuity, whether it be to manage the food supply in this country and stabilise it, but also allow businesses to continue. If you do tax and don’t give a relief on death for shares in a business, then in order to pay the tax, you would often have to liquidate that business or sell assets, which would often mean a problem for the business going forward.”
The budget should be announced at around 12:30pm on Wednesday.