Home Business News The Chancellor could immediately help the cost-of-living crisis with a Budget

The Chancellor could immediately help the cost-of-living crisis with a Budget

by LLB Finance Reporter
3rd May 22 9:28 am

The Chancellor could immediately help the cost-of-living crisis with some quick fixes and a budget say leading tax and advisory firm Blick Rothenberg.

Robert Pullen a partner at the firm said: Chancellor Rishi Sunak could provide more financial help with the cost-of-living crisis. For example, changing the tax bands, changing the child benefit thresholds, and lowering VAT.”

Robert said:” These calls are getting louder following the recent news that HMRC’s tax receipts ballooned by over £133bn in the last year, and amidst a further squeeze imposed through the additional NIC hike from 6 April 2022, being felt in pay packets over the last few days.”

He added: “Whilst the pressure may be eased slightly for some in July when the lower NIC threshold is increased, there are many other ways Rishi could support household finances.

This could include targeting the effects of fiscal drag. Although inflation is increasing, many of the income tax bands and threshold are not keeping pace. This means that in real terms, more and more of someone’s income is being dragged into higher tax brackets

“This will be keenly felt by families in particular, as child benefits are clawed back where income exceeds £50,000 – a threshold which is now lower than the basic rate band (£50,270) and which hasn’t changed for a number of years.”

Robert said: “This is an unfair rule which disproportionately hits single earner families and needs reform or scrapping altogether given the administration involved. It would also make sense to increase the basic rate and higher rate bands, as well as the threshold at which the personal allowance starts to be withdrawn (£100,000), by at least inflation.”

Robert said: “Depending on how generous the chancellor is feeling he could also look to more sweeping reforms, such as bringing back the old mortgage interest relief, perhaps on a means-tested basis, or introducing something similar for rental costs paid by low-income families. Similar reliefs could be brought in for travel or commuting costs, which could also help by encouraging office workers back to the city.”

He added: “The Chancellor recently announced a cut in VAT for some energy saving materials, including solar panels. As consumer spending seems to be hit as individuals look to cut costs, the Chancellor could also consider cutting VAT on essential purchases. To improve energy efficiency and reduce the amount households spend on heating. The rules which allow a tax-free loan to be taken from a person’s employer should be extended from just to cover travel costs to other expenditure, like solar panels.”

Robert said: “These simple fixes could come from a ‘cost of living Budget’ that he could enact quickly, and which would take the pressure off millions of households.”

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