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Key points from the Budget-that-was-not-a-Budget, by TaxationWeb’s Lee Sharpe. Any opinions expressed in the article are those of the writer, rather than TaxationWeb itself.

Introduction

The non-tax headline measures oriented around providing help for households and for business with their ever-increasing energy bills, and removing the cap on bankers’ bonuses.

Focusing on the tax aspects, the last decade or so of government policy might be described, somewhat fancifully, as going to bed with (forgive me) Gorgeous George, being lulled almost into a coma by Patience Hammond, dreaming briefly of Dishy Rishi …then being rudely woken by Crazy Kwarteng.

It is of course wrong to focus on one individual: the Chancellor does not work in splendid isolation, or even solitary confinement, but in joint enterprise to secure Government’s desired aims, having adopted whatever methodology (or perhaps ideology) currently holds favour.

Essentially, this week’s Chancellor has promised us a “new Era” of doing pretty much the same, tax-wise, as what old Chancellor Palpatine Osborne wanted and tried to achieve – (to cut and to simplify taxes) – only more so. I am not sure if this hastily re-packaged government genuinely believes it can carry off the ‘all-new, born-again, “the-last-twelve-years’-policies-were-nothing-to-do-with-us”’ spiel, but it did seem determined to give it the good old college try.

As an aside, the government’s cunning ruse of saying that this was not really a Budget, apparently so that it could then swerve any incoming cold cup of reality from the Office of Budget Responsibility, (OBR), put me very much in mind of HMRC trying to tell everyone that the new quarterly returns under Making Tax Digital are not really returns, so that it can swerve TMA 1970 s 113 – you know, the pesky law that says HMRC is not really supposed to make people file more than one income return per year…

Anyway, to the tax measures in the Government’s Prayer for Growth:

Growth Plan 2022 – main site

Growth Plan 2022 – main document

Also published alongside the Growth Plan 2022:

• The Growth Plan 2022: Factsheet on Income Tax
• The Growth Plan: Factsheet on cancellation of National Insurance rise and Health and Social Care Levy
• The Growth Plan 2022: Factsheet on Stamp Duty Land Tax
• The Growth Plan 2022: Factsheet on Corporation Tax - GOV.UK
• The Growth Plan 2022: Factsheet on Investment Zones
• The new alcohol duty system: consultation response

The Growth Plan 2022: Tax-Related Documents –

• Reversal of the Health and Social Care Levy and in-year reductions for National Insurance contributions rates
• Stamp Duty Land Tax — reductions for residential properties

As regards new tax measures, notably:

Income Tax    

1. Basic Rate of Income Tax to fall from 20% to 19% from 6 April 2023. This is a year earlier than proposed by Rishi Sunak who, according to his March 2022 Spring Statement, wanted to act in a responsible and sensible way. I must have missed the uncommonly good turn of fortune we have had since March 2022, that means the Government can now sensibly afford to bring forwards a tax cut that will cost the Treasury more than £5billion in 2023/24. It may be only a 1% tax cut, but it apparently applies to the incomes of over 30million people. But not those paying Scottish Income Tax.

But I am also wondering how on Earth the government believes it will actually increase its Basic Rate tax take as a result from 2025/26, (as per Line 5 of Table 4.2 of the Growth Plan 2022), unless perhaps it thinks that the volume of incomes and/or taxpayers bearing Basic Rate tax will rocket in the next couple of years or so? I doubt this can simply be down to timing differences, similar to the widespread income manipulation / forestalling activity that took place in 2009/10, we were told, when the Additional Rates were introduced: I am not convinced that enough of those 30million+ Basic Rate taxpayers can influence when they receive income – or, perhaps more importantly, that enough can realistically afford to defer that income, even if they actually can dictate the timing. Maybe it’s that methodology/ideology thing again.

2. The 45%/39.35% Additional Rates of Income Tax (and effectively the £150,000 threshold) will be eliminated from 6 April 2023. This was a major headline for many reporters but given that successive Conservative Chancellors from Osborne onwards, have long chafed under its imposition, its complete withdrawal has always been on the cards – even if the timing is perhaps questionable. Again, this amendment does not apply to those who pay Scottish Income Tax.

Unlike the just-mentioned reduction in the Basic Rate, I suspect there may well be both temptation and realistic opportunity here for current Additional Rate payers to defer taking 2022/23 income – bonuses, dividends, etc. – until the new tax year starts. Readers should keep in mind that any earnings deferment should basically be agreed before the employee is entitled to be paid – see HMRC’s position in its Employment Income Manual at EIM42260 et seq., and note the further triggers aimed at directors. Dividends are a separate regime, and the timing of payments can work differently again, depending on whether they are interim or final. Due regard should also be given to any increased risk in relation to overdrawn loan accounts, loans to participators, etc., if there is to be an extended interval before (re)payment.

See also next for removal of 1.25% Levies, etc., on NICs and dividends

Business Tax / Employees / Dividends

3. The 1.25% Health and Social Care Levies / additional NICs charges will be cancelled / removed from 6 November 2022 – which is pretty much as fast as HMRC and software developers will be able to co-ordinate this enormous volte face. And it is enormous – the cost to the Exchequer is forecast to exceed £15billion pa by 2026/27.

It seems plausible that some employees may be in a position to defer bonuses, etc., at least for a month or so until 6 November at the earliest; and employers may well like to assist them – potentially saving Employers’ NICs as well, of course. This will not “work” for directors (or any other employees who have the special *year to date" annualised earnings period for NICs.) 

If considering deferment, note that the liability for NICs has a different trigger from Income Tax in the finer detail – being broadly when the earnings are placed unconditionally at the employee’s disposal – see NIM01002. Note also that HMRC has powers under regulations to direct employers to operate specific earnings periods, or to ‘normalise’ payments (SI 2001/1004); even so, deferment is still possible, if arranged properly.

All of this suggests to me that the Government has been more than happy to play “pay packet ping pong” with the nation’s salaries, while its ministers were otherwise engaged tearing chunks off each other in Twitter’s deepest, dirtiest trenches, over the last few months. To summarise, in roughly the first half of this tax year alone, we will have:

• Changed the threshold and the rates at the beginning of the tax year, as normal (does anyone remember that the Primary (Employee) Threshold was originally going to be £9,880 for 2022/23?)
• Changed the Employee Threshold again in July
• Changed the rates for employers and employees basically back to what they were before 2022/23, by November 2022

I have tried to summarise the changes, in some semblance of comprehensible fashion, in the table below:

Our Summer Term Project: How We Simplified Taxis for Business By HM Government, Class of ‘22

Values are italicised where the corresponding calculations are annualised – i.e., where there is an annual or cumulative “for the year to date” calculation – so, unlike with ‘ordinary’ employees’ NICs, (where calculations for earlier pay periods in the tax year will stand regardless), interim calculations in the tax year for annualised earnings will be over-written, as further earnings arise in that tax year, or the tax year concludes.

*TBA because the Government does not yet appear to have addressed all the secondary transition implications for annual basis earnings (presumably it will be 14.53%, time-apportioned like all the other rates, including Class 1A on Benefits in Kind).

All this, and we’ve not even had the official 2022 Budget yet. Payroll bureaux and employers will have to contend with yet another cycle of queries and complaints, come November. Employees may also start to wonder how long it will be before the Government’s next in-flight adjustment means that the nation’s pay packets start to plummet, rather than climb. This could add a scary new dimension to the traditional PAYE tax code rollercoaster.

4. The corresponding 1.25% hike in dividend ordinary, higher and additional rates will also be withdrawn but this time from 6 April 2023. We might again see further incentive for some OMB/family company shareholders to postpone some dividend payments until the new tax year – the points raised above in relation to Additional Rate taxpayers may likewise apply here.

For anyone who might find such tax/NIC-saving suggestions unacceptable, I respectfully draw your attention to the comments made by HMRC, no less, back when the Additional Rate was imposed – albeit then the Exchequer stood to gain from a veritable goldrush of taxpayers booking their income early, before the Additional Rate(s) commenced:

“These [behavioural changes] occur when individuals change the timing of their income to minimise exposure to [higher tax rates]. …this behavioural response is entirely legitimate and difficult to prevent…” (emphasis added).

5. Corporation Tax rise from 19% to 25%, due from 1 April 2023, to be cancelled – very good news for all but the smallest companies (although a good proportion stood to benefit from the 19% “safe haven” for the first £50,000 in annual taxable profits). However, cancelling the increase is projected to cost almost £19billion pa by 2026/27 – by which time it may cost more, annually, than reversing the Health and Social Care Levy.

If by now you are nervously wondering how on Earth the Chancellor expects the UK will be able to pay for all this and subsidise fossil fuel companies’ Super-Duper Profits for the next couple of years, I can tell you that I was worried too. But then the Chancellor confided in me that he has some very special beans: one called “Growth” and the other called “Magic Money Tree”. I am not sure that all economists share the Chancellor’s faith in his special beans but, alas, none but true believers will make it to the promised sunlit uplands, mothership, etc.

6. Annual Investment Allowance (AIA) annual expenditure limit to be kept “permanently” at the current £1million (4.8 of the Growth Plan 2022) – welcome for small and medium-sized businesses pretty much everywhere. The AIA is an expensive measure and the change would ordinarily be major tax news in a real Budget. But this is not a Budget, and it is dwarfed by several of the other measures here.

As an aside, I see that HMRC appears to have twigged that the “Relevant Factor” (applied to the disposal proceeds of any Capital Allowances assets on which Super-Deduction had been claimed), was set automatically to unwind from 1 April 2023, so HMRC is intending to counter any permanent saving that might otherwise have transpired now that the hike in Corporation Tax rates is not going to happen. Of course the Super-Deduction was sold as a boon to businesses, despite its really serving only to level the tax efficiency of qualifying investments in the run-up to the higher tax rates previously scheduled from 1 April 2023.

7. Rolling Back IR35 recent IR35 / Off-Payroll Working Regimes (4.20) – to be clear, IR35 itself is not being abolished. Rather, the 2 latest expansions of the anti-avoidance regime are to be repealed, from 6 April 2023, being:

Public Sector Bodies (FA 2017 Sch 1, applying from 6 April 2017), and

Private Sector (FA 2020 Sch 1, applying ultimately from 6 April 2021)

Regular readers will be aware that we have been highly critical of HMRC’s approach when it comes to IR35 in general, such as:

• Concentrating more on tax yield than on actual tax compliance, so that contractors were being taxed too heavily (but that was OK, because the government’s tax receipts were up)
• Repeatedly refusing to update its CEST Employment Status Online Tool so that it actually followed the law, rather than what HMRC would like the law to say
• Losing far too many cases at the courts to maintain credibility

While we are pleased that UK contractors will soon be far less likely to have blanket “within IR35” contracts, or similar, incorrectly and unfairly imposed on them, it is important to recognise that:

• Contractors will still have to consider their own status – i.e., observe the original IR35 regime
• HMRC would argue that these regimes (or something like them) were needed in the absence of suitable alternative resources and/or information to flag questionable engager-intermediary-contractor relationships. HMRC is exploring ways to increase its knowledge and awareness of businesses, so the information deficit may soon be addressed by other means.

8. New Investment Zones – starting with around 40 designated areas, they will benefit from relaxed planning laws to encourage rapid development and business investment, and special tax breaks including:

• 100% Stamp Duty Land Tax relief on land bought for commercial or residential development
• 100% Business Rates Relief on newly occupied and expanded business premises
• 100% First Year Allowances for qualifying plant and machinery (e.g., for when the £1million Annual Investment Allowance is not enough)
• 20%pa Enhanced Structures & Buildings Allowance (the normal SBA is 3%pa)
• 0% Employers’ NICs rate on the first £50,270 per year of each new employee’s earnings

The cost of these zones has not yet been estimated, but these proposals are quite similar to the 8 free ports championed by Rishi Sunak in Budget 2021 – that he said would “generate trade and jobs around the country”. The OBR disagreed, suggesting that instead of generating new trade and jobs, they would just be relocated:

“[W]e have assumed that the main effect of the freeports [sic] will be to alter the location rather than the volume of economic activity, so the costs have been estimated on the basis of activity being displaced from elsewhere. To the extent that activity is genuinely additional, it will be revealed in GDP and receipts data over time, though given the small scale relative to the whole economy, such effects would probably be difficult to discern even in retrospect.”

Ouch. This cold water may help to explain why the OBR was not invited to participate in the Chancellor’s Friday morning Prayer Meeting. The difference between a broad church that welcomes constructive criticism, and a cult that banishes anyone who refuses to drink the Kool-Aid… well, that’s one for more capable scholars to reflect on, I reckon.

Having said that, even if the new investment zones do not significantly boost national trade, they might yet do some good work towards Levelling Up – so long as the zones are approved in areas that need them most? We shall see.

9. Stamp Duty Land Tax Reductions – for purchases in England and Northern Ireland effective 23 September 2022 and beyond, the 2% rate for residential properties has basically been replaced by an extended 0% initial rate:

This will save homebuyers up to £2,500, where consideration rises to £250,000 and beyond. Where relevant, the Higher Rate for Additional Dwellings will continue to apply as a 3% surcharge on the above.

Also, the de minimis SDLT threshold for First-Time Buyers has risen from £300,000 to £425,000; the special relief upper limit has likewise risen by £125,000 from £500,000 to £625,000.

According to HMRC’s Factsheet, no less, this is a “tax-cut [sic] for hard-working people”. So presumably sloths, loafs, laggards, knaves, bounders and wastrels are specifically excluded by the new amending legislation – damn.

10. VAT-free shopping (4.19) – a new digital scheme for non-UK visitors to Great Britain will enable them to obtain a VAT refund on goods bought for personal export from the UK (the existing system in Northern Ireland is to be modernised alongside). This should help the retail and tourism sectors.

11. Other Business-Related Tax Measures:

• (Seed) Enterprise Investment Scheme ((S)EIS) (4.7) – increasing the maximum aggregate SEIS investment into a company from £150,000 to £250,000; the Gross Asset limit will be increased to £350,000 and the age limit will rise to 3 years; the personal investment limit will be doubled to £200,000; all these measures from April 2023. EIS more generally, to be extended beyond 2025.
• Company Share Option Plan (CSOP) (4.7) personal share issue limit to be raised from £30,000 to £60,000; restrictions on share classes to be more aligned with EMI shares; these measures from April 2023.
• Pensions Regulatory Charge Cap (4.10) – to be removed in some cases, to attract investment from pension funds
• Long-term Investment for Technology & Science (LIFTS) (4.11) – to seed funding provision, for qualifying companies and investments, starting some time next year.

12. Killing off the Office of Tax Simplification – the OTS is to be wound down and instead a commitment to simplify the tax code will be (surgically?) embedded in everyone working at HM Treasury or HMRC.

Notable Omissions from the Growth Plan

Brexit and the Return of the Proverbial Prodigious Prodigal Taxpayer – True to recent form, the Brexit omerta still holds government in a vice-like grip.

However, when justifying the abolition of the cap on bankers’ bonuses, Mr. Kwarteng said “we need global banks to create jobs here, invest here, and pay taxes here in London, not Paris, not Frankfurt, not New York”. He also argued that the cap did not constrain total remuneration but only bonuses. I presume he is smart enough to realise that the cap specifically on bonuses was meant, specifically, to discourage reckless short-termism, with comparatively higher basic salaries then likely to encourage a more prudent, far-sighted approach to investment decisions.

This measure, the abolition of the 45% Additional Rate, and a “plan in the coming weeks to ensure the immigration system supports growth”… I suspect the last thing a government worried about a “brain drain” would want to do, is admit publicly that it was worried about a “brain drain”. Otherwise, the Brexodus might get much worse.I sense a quiet plan to encourage finance people to return, or not to leave in the first place.

Employees’ Tax-Free Mileage Claims – We have written at some length already that the maximum rates at which employers can reimburse employee business mileage – without triggering a tax charge – were basically worked out more than 20 years ago. Employees cannot claim for their actual costs tax-free any more, which is a simplification designed to benefit HMRC, so that it no longer has to process many thousands of such claims every year. Meanwhile, the cost of motoring has basically doubled, but employees cannot be reimbursed at higher than those old rates, lest they trigger a personal Income Tax charge. It would appear that, fundamentally, an antiquated tax regime is being used wrongly and deliberately to tax individual employees on “profits” they absolutely have not made. If this is the case (and only HMRC really knows the metrics it devised to convert motoring expense data into universal rates), then it is unforgivably scandalous that it has been allowed to stand – particularly when one considers how ridiculously straight forwards it would be to fix.

The Loan Charge – We have also written previously about the Loan Charge and pointed out that, thanks to the high suicide rate that mysteriously attaches to the threat of bankruptcy and losing one’s home, people of working age are, statistically speaking, much more likely to die if they “catch” a Loan Charge, than if they catch COVID. From the sidelines, it is some mollification also to note that Sir Morse’s disconcertingly keen endorsement of IR35 for the private sector has, ultimately, accrued precisely nul points from the studio audience, as noted above. But that does not change the egregiousness of the Loan Charge itself.

Patient Capital – I wonder if anyone remembers the Autumn 2017 Budget, wherein the then-Chancellor Philip Hammond, spoke of a report commissioned into “patient capital” and the benefit of investing for the long term, the need for clean air, funding for maths teaching, science and millions of apprenticeships? (This is how I got to “Patience Hammond”). It is amazing how quickly some concepts fall out of fashion. But he also promised driverless cars on Britain’s roads by 2021 so, clearly bonkers.

Education – Back to the current Chancellor and the 2022 Growth Plan, there was a lot of talk about investment and growth, but not a single word on education. I am not sure I understand how a knowledge-based economy can meaningfully invest for the long term, otherwise. To be fair, Kwasi Kwarteng did say we already had “unbounded entrepreneurial drive” and “highly-skilled people”, so maybe we just don’t need to invest in skills or education any more.

Green Crap – The Chancellor did not mention the environment, global warming or the climate. It seems that the Government has for many years been happy to offer warm words on the environment then ditch “the green crap” at the earliest opportunity. Rishi Sunak launched a Green Homes Grant in September 2020, that was implemented so badly it was quietly withdrawn roughly a year later, with only a small fraction of the predicted number of homes benefitting as intended. One has to wonder: if the Green Homes Grant and its predecessors had been followed up properly, how much less would the Government have to spend in this year alone, to pay for fossil fuels and to keep the lights on this winter – and even now, eschewing insulation and other permanent efficiency savings?

Reflections on the 2022 Growth Plan

We have covered what was in the Plan, and some notable omissions. Now to cover a few points in further amateur-economist detail.

Recent Chancellors and Their Unpopular Fetish

It seems to me that Chancellors have recently developed an unhealthy, “moth-to-the-flame” fascination with being unpopular.

Things started fairly tamely, in my book, with George Osborne’s 2010 Emergency Budget Speech: “I am not going to hide hard choices from the British people or bury them in the small print of the Budget documents.”

Rishi Sunak went further, with his “Unpopular but Honest” Budget 2021: “I recognise [these decisions] might not be popular. But they are honest.” His 2022 Spring Statement also included a “willingness to make difficult and often unpopular arguments elsewhere”.

Prime Minister Liz Truss has concentrated more on the popularity aspect, and has explicitly said that she is “prepared to be unpopular”, and is “willing to do unpopular things”.  Admittedly she has not, to my knowledge, actually been Chancellor herself. But I am guessing that Kwasi Kwarteng, who is Chancellor as I write, took the position because he and the Prime Minister are in lock-step agreement as to how best to implement a joint vision for the economy. ergo, Mr. Kwarteng is of like mind.

This is a strange pursuit indeed, for career politicians who, presumably, want to get re-elected. Maybe it’s a twist on “you are going to keep taking this medicine, until I feel better”.

Simplification

In terms of simplification, the Growth Plan has:

• Removed the Additional Rates of Income Tax
• Abolished the Health and Social Care Levy
• Rolled back two significant chunks of the “IR35” legislation
• Removed the 2% residential SDLT band

Keeping the Annual Investment Allowance at £1million pa, and Corporation Tax at 19%, will also help.

But I am not convinced that abolishing the Office of Tax Simplification is the best “first step” to make the tax system “simpler, more dynamic and fairer”.

Consider also that abolishing the Additional Rate(s) is supposed to favour almost 1million taxpayers and collectively save them £2.065billion per year, by 2026/27. If I had just £2.065billion to spend on simplifying the UK tax regime, then I might prefer to look at getting rid of:

All but one of these regimes were introduced in the last decade, and some of them generate pitiably small revenues for HM Treasury at spectacularly high burden to the taxpayers involved. Aside from Making Tax Digital, to whose truly terrifying majesty we are yet fully to bear witness, consider the VAT Reverse Charge on Construction: even HMRC admitted it would affect 150,000 construction businesses, significantly affecting their administrative burden and reducing cashflow, to protect £80million pa.

Of course these taxes were introduced and retained for a reason: sometimes there is a moral dimension, such as combatting obesity, or saving the planet …or not withdrawing a particularly high tax band “when we are asking others in our society on much lower incomes to make sacrifices, for we are all in this together”. That was George Osborne in his 2011 Budget Speech, following the Global Financial Crisis. How times have changed.

Dodgy Figures and Claims

Budgets or not, we seem to keep coming across highly dubious claims about tax costs, savings, etc. – for example:

NICs for 2022/23: A Day of Reckoning for the Former Chancellor

Loan Charge Independent Review: Some Meat but No Blood

Making Tax Digital (MTD) – The Truth Is (Already) Out There

Budget 2021: Unpopular but Honest?

HMRC “May Not Always be Right, but is NEVER Wrong”

Two claims in this 2022 Growth Plan that simply do not match up are:

1. Reducing the Basic Rate from 20% to 19% from 2023/24: “31 million taxpayers will benefit from this policy in 2023/24, with an average gain of £170”. Dividing £170 by 1% means that the average income for these 31million people, that is then taxable at the Basic Rate, is expected to be £17,000 in 2023/24. This passes the smell test, because it suggests that their average taxable incomes in total (including amounts taxable at 0% in the Personal Allowance of £12,570) will be c£30,000. So far, so good.
2. Reversing the 1.25% Health & Social Care Levy “means 28million people across the UK will keep an extra £330 a year, on average, in 2023/24”. Dividing this much higher in-year saving of £330 by 1.25% means that the average Leviable income in 2023/24 would have been £26,400 before the Levy was withdrawn. Which suggests that total earnings would be £26,400+£12,570 = c£39,000. But average earnings in the UK, according to the Office for National Statistics, are about £30,000pa, not almost £40,000pa. I think somebody is being very optimistic about UK wage growth in 2023/24.

Also, how can average Leviable income, which is primarily on earnings, exceed average Basic Rate incomes, which is basically on all taxable incomes, by £9,400? Now, I accept that we are dealing with averages of different categories of people: not all Basic Rate taxpayers would have been caught by the Levy if it had not been withdrawn (pensioners, landlords, etc.). But practically all earners paying the Levy would have paid the Basic Rate of Tax in 2023/24, so those populations will strongly overlap. This discrepancy again points to somebody being more than a little bit adventurous with their assumptions.

Finally, something that elicited a wry smile was the claim that “there is a range of academic evidence which suggests that cutting Corporation Tax can boost investment and growth”, followed by the observation that “since 2010, successive cuts were made to the main rate of Corporation Tax, reducing it from 28% in 2010 to 19% in April 2017”.

So, we have the academic theory; then we have George Osborne’s huge experiment with cutting Corporation Tax to generate investment, profits and thereby ultimately tax through growth; and then we have… nothing. That is because Osborne’s experiment was a failure, as we set out at some length in Does Lowering Tax Rates Increase Tax Yield? The answer is “no”, it does not – certainly not at the level of rates and reductions that are contemplated here.

It may be trite, but I have heard that one definition of insanity is doing the same thing, over and over again, and expecting a different outcome, unsupported by the growing weight of evidence to the contrary.

Conclusion

Throughout all the mess in 2022/23, one thing that appears still to stand up is the alignment of the NICs lower threshold(s) with the Income Tax Personal Allowance. That is a genuine simplification, and I think most would agree it is worth keeping. What is astonishing, is for how long previous Chancellors have flirted with the proposal as a nice idea, but then decided it was too expensive and complex to implement; come 2022, and it was basically bolted on as an afterthought, while scratching around for new measures that could help to put a dent in the looming Health Levy, without actually having to reverse it. Just imagine how angry those ministers responsible for the 2021 flagship Health and Social Care Levy would be if, only a few months later, an all-new Government, whose Cabinet had absolutely nothing at all to do with the Levy previously… then cancelled it.

Looking back, central to George Osborne’s tax policy as Chancellor was a bet on cutting Corporation Taxes to drive growth, but his approach resulted in a decade of austerity, as public expenditure was cut to suit, while the expected growth failed to materialise.

In spite of this, the current Government has bet on abolishing the Additoinal Rates for personal taxes paid by the highest earners, to drive growth (to unchain Britannia, if you will) but this time, the Chancellor is happy to borrow so that public funding is unscathed. For now.

Otherwise, aside from the small cut in the Basic Rate, the 2 other headline tax measures - cancelling the Health and Social Care Levy, and the hike in Corporation Tax previously scheduled for April 2023 - are much 'larger' in value. But it is difficult to see how they will encourage growth above and beyond current levels. Given that poor growth has dogged the UK for a number of years, and that announcing the introduction of the Levy and the Corporation Tax increase did not materially affect growth in the first place, reversing the policies now, on the cusp of theiri implementation seems highly unlikely to encourage growth to reach for the stars.

In terms of abolishing the Additional Rate, the rationale – if you can call it that – appears to be that the UK’s captains of industry and finance could put rockets under the UK economy, but have instead been sulking for a decade or more because their personal tax rates are just too high. The tax cost of liberating this crack force of c700,000 individuals? A veritable snip, at c£2.1billion a year. That works out at £3,100 per super trooper, per year. 

But let’s work through this logic.

1. The Government is saying that the key to galvanising these individuals is lower tax bills. Presumably this really means money in general, rather than tax specifically. So they are money-motivated – highly money-motivated, as they already earn substantial sums but are prepared to change their behaviour, for more money.
2. The Government is also effectively saying that these people have plenty of spare capacity – they can easily scale up their efforts and make significantly more money through their work if they want to. If not, the tax break is a waste of money.
3. The Government is also saying that their increased work at the individual level will effectively work as a “force multiplier”, to catalyse or scale up increased business profits and salaries more widely. If not, then however hard these individuals may be prepared to work, their increased productivity at the personal level will not turn around the fortunes of a nation.
4. That also implies that a great many more people in the working population must also have significant spare capacity, to be catalysed by these very high earners.
5. The inference is that a substantial proportion of the nation’s workforce – including its best champions – is substantially under-utilised, but could perform significantly more work in aggregate, if motivated.
6. Also, monetary reward is the key motivator, pretty much universally.
7. And all that is needed to transform the nation’s finances, to set the ball rolling, is to pay each of the nation’s finest just £3,100 a year.
8. Despite the fact that they are highly money-motivated, they just cannot quite work out how to make more money for themselves, unless you can help to pay them about as much money as they already earn in a week.
9. Send no money now: payments can be made in 52 weekly instalments of £60, starting April 2023.
10. ps This is NOT a pyramid scheme

Feel free to call me lazy, or greedy, or even a bit thick. But please not all three at once.

One clear difference between Osbornomics and Trussonomics, on paper at least, is austerity, and the priority of borrowing versus cutting public expenditure.

But Sterling had already launched itself off a cliff by the time the Chancellor had finished his speech (it has also been reported that several financiers enjoyed advance warning of the bones of the Plan beforehand) and the one thing that the new Plan has proved remarkably good at so far, is making almost everything even more expensive this week than last. Which in turn means borrowing requirements will increase, and interest rates will rise. Austerity cannot be far behind.

It could be argued that in just a few short days, and more than anyone else in recent history, Thelma Kwarteng and Louise Truss have, between them, helped UK inflation and mortgage repayments to scale previously unthinkable heights. Or, to put it another way, never has so much been owed so quickly, to so many, by so few.