October 2021 might be the first ‘Twitter Budget’ with Rishi Sunak dropping teasers and announcements through both his social media and more conventional media outlets. Whilst the Chancellor’s dog (Nova) might have proved a hit, this modern addition was far less welcomed by the Speaker of the House, who gave a fairly hefty rebuke at these premature announcements.

So with the build-up being filled with spoilers, dog pictures and parliamentary wrapping of knuckles, what did we actually learn from the Chancellor’s Budget in terms of personal finance?

Well, the short answer is, not a lot.

For all the talk of growth, public spending and ‘levelling up’ there was not a great deal of change in terms of personal wealth and taxation.

What will have an impact from the Chancellor’s announcements are:

Inflation

Inflation was the buzzword, or the Halloween boogeyman, of the Chancellor’s October budget announcement and whilst various announcements, such as the further freeze to fuel duty, there was no getting around the announced 4% rise in the Consumer Prices Index (CPI).

This was compounded by the information that energy costs in particular are set to peak over the winter months to nearly double their pre-Covid levels.

Various softer measures, such as temporary visas to supply chain drivers were announced under the belief that this is just a ‘Covid Hangover’ but if these inflationary pressures linger over the next twelve months then further measures will likely be looked at.

Alcohol

Previously, the SNP and Nicola Sturgeon were accused of levelling a “Buckie, or Buckfast, Tax” on alcohol and it was Rishi Sunak’s turn to follow suit by announcing a radical change to alcohol duties that will penalise drinks with higher alcohol content; specifically mentioning fortified wine and high-alcohol ciders.

This was quickly followed by cuts to those drinks with lower alcohol content drinks such as rose wine, fruit cider, sparkling wine and lower alcohol beers. There was also a ‘Draft Relief’ announced designed to stimulate the countries various pubs, with a further 5% off the duties levelled on a pint down your local.

However, any hopes of getting your Prosecco cheaper for Christmas won’t be the case, with the change to alcohol duties not set to fully come into effect until February 2023.

Universal Credit

Whilst not a great deal of personal taxation cuts were expected, the one that was announced saw a change to the tapering of universal credit. The current level of tapering sat at 63% and was rightly labelled as a hidden tax, this has seen an 8% reduction to a new rate of tapering of 55%.

Air Travel

Lastly, your personal finances might see a difference when booking air travel due to a change in Air Passenger Duty.

Good news for those who are intent on ‘staycationing’ or who travel regularly around the country as the ‘return exemption’ will be re-instated and effectively see you pay 50% less Air Passenger Duty on internal flights.

Bad news for those wishing to travel the globe, with a new higher band of Air Passenger Duty for those on flights longer than 5,500 miles. This will see flights to places like Australia rise from April 2023.

Whilst the impact of the Chancellor’s other announcements might have longer-term implications or affect those in specific industries, the above should be the main implications for what the Chancellor announced today.

Looking forward, proposed changes to the Capital Gains Tax regime still hover and more radical ideas such as the one-off ‘Wealth Tax’ will continue to be mentioned from some quarters but for now, the status quo seems to be being maintained and with Rishi Sunak’s declaration that taxes will decrease for everyone by the end of this parliament, it would appear that the direction of travel is away from some of the tax changes mooted ahead of this budget.

Jon Young
Chartered Financial Planner – WealthFlow
Jon.Young@wealthflow.com

This article is distributed for educational purposes and should not be considered investment advice or an offer of any product for sale. This article contains the opinions of the author but not necessarily the Firm and does not represent a recommendation of any particular security, strategy or investment product. Information contained herein has been obtained from sources believed to be reliable but is not guaranteed. Past performance is not indicative of future results and no representation is made that the stated results will be replicated. Errors and omissions excepted.

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WealthFlow Group Ltd. Registered in Scotland No SC635011. Registered Office: 10 Charlotte Square, Edinburgh EH2 4DR.

Head Office & Consulting Rooms: 10 Charlotte Square, Edinburgh EH2 4DR.

Mail correspondence to our Central Scotland Admin Hub: WealthFlow Group Limited, PO Box 14947, Grangemouth FK3 3AU.

WealthFlow Group Ltd is authorised and regulated by the Financial Conduct Authority.

The guidance/advice contained in this website is subject to the UK regulatory regime and is therefore restricted to consumers based in the UK.

For your protection, unresolved complaints can be referred to the Financial Ombudsman Service.

To contact the Financial Ombudsman Service, please visit www.financial-ombudsman.org.uk.

WealthFlow Group Ltd. Registered in Scotland No SC635011. Registered Office: 10 Charlotte Square, Edinburgh EH2 4DR.