Chancellor Sajid Javid is new to the job and has yet to deliver his first full Budget. But he has given us some idea of where he stands and has declared a desire to “simplify the tax system”. This could mean good news for some and bad news for others if the ideas are implemented in the future.
What are Chancellor Javid’s current intentions?
Mr Javid said to The Times that he is “low tax guy” and “I think taxes should be efficient…Generally I want to see lower taxes, but at a level that is going to pay for the public services.”
Interestingly, in the same interview, he said that you don’t always “have to have the highest tax rate possible” in order to optimise tax revenue for the Treasury.
When pressed, he said that he should “always be thinking about the lowest paid” but he couldn’t reveal anything about higher rate tax payers’ situation until the Budget.
Does he intend the UK to borrow more money?
This is something Prime Minister Johnson has supported, saying: “extremely low interest rates” means we could, as a country, be “borrowing more to pay for more infrastructure”.
Mr Javid seems to agree with this: “It is obvious to me that when you’ve got some of the lowest rates on government debt this country has ever seen, I wouldn’t be doing my job if I wasn’t thinking seriously about how do we use [that opportunity].”
What about the switch in Stamp Duty responsibility?
His proposal to switch the responsibility for paying Stamp Duty from the buyer to the seller certainly captured attention of many. The aim is to ensure that those buying their first home don’t ever pay Stamp Duty. Perhaps helping to revitalise that end of the housing ladder.
This is a much bigger step than the 2017 changes to Stamp Duty. At this time, first time buyers no longer paid any Stamp Duty on properties worth up to £300,000. Before this change, it had to be paid on English and Northern Irish purchases from £125,000.
What do other people think of Mr Javid’s plans?
The Institute for Fiscal Studies’ Paul Johnson, on Radio 4’s Today programme, said: “All chancellors come in saying they want simpler taxes but they always end up leaving office with a longer and more complicated tax code than they started [with].”
Mr Corbyn feels that the proposals so far would increase economic inequality in Britain, saying: “We cannot go with austerity year-on-year and at the same time giving tax cuts to the best off.” Labour’s plans include using a Corporation Tax rise to pay for public services, local government needs and university places.
This intention could see a rise in corporation tax paid by limited companies resulting in more financial pressure for small and medium size businesses.
When is the Budget likely to be?
The government have not yet announced the date for the 2019 Autumn Budget. Obviously, the resolution to our relationship with the EU will have a huge impact on our economy’s requirements. Mr Javid said there would need to be “a significant economic package as a response” to a No Deal Brexit. The knock-on effects of this on other areas of the UK’s budget remain to be seen.
