Vale & West Chartered Accountants Blog

Budget could raise Personal Allowance

Emergency measures that were planned as far back as June 2016 could be implemented in the upcoming Budget to protect the UK economy from a potential no-deal Brexit, and one of these could be a rise in the Personal Allowance.

The plans, codenamed ‘Project After’, were drawn up after the 2016 Brexit vote, and now that a no-deal Brexit is looking more likely, some ministers and officials have returned to them in a bid to avert a recession.

The plans include a list of possible options for ministers to help offset the economic impact of leaving the EU without a deal and were compiled with input from across Whitehall, including the Treasury, the Department for International Trade and the Cabinet Office. It is also thought that the Bank of England was involved.

Chancellor Philip Hammond announced tax cuts in the Autumn Budget and it has been hinted that under Project After plans, he could raise the Personal Allowance, which is the rate at which individuals start paying tax on their income.

This would help the economy by putting more money into people’s pockets to help them to keep spending, which would have a knock-on benefit to businesses, many of which blame a lowering in consumer spending for a rise in the number of insolvencies last year.

There is also a suggestion that Mr Hammond could cut income tax in the Budget, although it is thought he could face political pressure not to cut taxes for wealthier voters. The Chancellor could also cut stamp duty to help stimulate the housing market, although moves to cut taxes and boost spending could prompt fears of rising interest rates and inflation.

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