It was good to hear the chancellor say that 'ending austerity' should not mean tax hikes. Increases in the personal allowance and higher rate income tax thresholds, with freezes to taxes on beer, cider, fuel and short-haul flights, will give much-needed breathing space to hard-pressed taxpayers.
That said, the tax burden overall will be still be increasing. And to truly seize the opportunities afforded by Brexit, we should be looking at a much more serious and overdue reform of the tax code.
Our team has analysed the Budget in detail and produced this briefing note - a few key areas are outlined below.
Stamp duty is still an appalling tax set at punitively high rates and is wreaking havoc on housing markets. Gimmicky tweaks, like the surcharge on additional properties, ultimately end up penalising tenants and increasing rents. It complicates the tax system, distorts the housing market and may not even raise much revenue so it’s disappointing that the chancellor has done almost nothing to fix the problem in this budget.
The average UK property price was £249,748 in August 2018, and would land the buyer with a £2,494 stamp duty bill. In London the average price was £486,304, landing buyers with a £14,315 stamp duty bill.
Housing and planning reform
Anything other than getting more homes built is just tinkering around the edges of the problem. The only way to get more built is by allowing taller, denser urban buildings and releasing some of the green belt so that land with permission becomes cheaper. Building on just 5 per cent of the London green belt would allow it to grow by almost a sixth.
The budget is right to echo TaxPayers’ Alliance research on productivity by noting that building “more homes in the right places is critical to unlocking productivity growth and makes housing more affordable”, but its assorted spending measures are unlikely to achieve its ambition.
Potholes and road repairs
Britain’s roads are in a terrible state so the announcement to fund £420 million for local authorities to tackle potholes and repair roads and bridges is welcome. Unglamorous transport projects like this are what taxpayers expect for their money, not white elephants like HS2.
For example, with 14,420km of minor roads in England classed as requiring maintenance, the £420 million equates to £29,126 per km, assuming none of it is spent on A roads or motorways.