In this Hardman Talks, Keith Hiscock talks about the paper he has published, reviewing the October 2024 UK Budget. This latest Insight is entitled “We got it wrong” and in this interview he explains exactly what about the 2024 Budget he got wrong! He had expected investors to bear the brunt of the measures raising tax revenues to fill the alleged £22bn ‘black hole’. However, it transpired that employers were coshed through changes in National Insurance.
Keith outlines the critical aspects of the budget, with a primary focus on the increase in National Insurance and other tax measures targeting employers. These policies raised alarm, especially regarding their impact on business confidence, job security, and long-term economic growth. Keith provides his perspective on why these measures, although aimed at bridging a significant fiscal gap, could have unintended and damaging effects on the UK’s economic health. He explains how the Chancellor seems to have committed a number of unforced errors. The evidence is that, far from boosting GDP growth, the budget has killed business confidence. Normally it is external events that provide the difficulties for Chancellors – but not this one.
In addition to the challenges for businesses, the Budget did introduce some changes that affect investors. Keith discusses the potential impact on tax-advantaged schemes like the Enterprise Investment Scheme (EIS), Seed Enterprise Investment Scheme (SEIS), and Venture Capital Trusts (VCT), noting that while these schemes remain largely unchanged, other areas, such as inheritance tax and capital gains tax, have seen adjustments. Of particular interest are changes to inheritance tax (IHT), including a halving of the relief on qualifying AIM shares, and a shift in business property relief, where only the first £1 million will qualify for full relief. These adjustments have already triggered protests from farmers, and the full impact of these changes on investment strategies remains to be seen. Additionally, increases in capital gains tax could deter investment and further limit growth in the private sector.
Keith offers a stark warning: without real, sustainable growth, the government’s goals of improving public services, funding increased investments, and expanding the economy may be out of reach. As the UK faces rising interest rates and higher debt repayments, these measures risk creating a vicious cycle that could delay any meaningful economic recovery.
This is the first of two interviews about the article, “The October 2024 Budget: We got it wrong”. The second video looks forward, asking what might happen in economic and political events in 2025.
Watch the interview now to find out more.
