The headlines from the recent Autumn Statement were all about tax cuts.

This is marketing over substance – taxes are most definitely going up.

In fact tax as a share of GDP will soon hit post WW2 highs.

With an eye on next year’s general election, the government’s main message was actually “vote for us”.

The situation is so bad the government are trying to sell economic stagnation as a vote winner and I think taxes will keep on increasing.

What can you do about this? Watch this short video where I explain the current situation and the opportunities it presents.

For a transcript of the video, keep reading:

 

Hello everyone. In this video we’re going to talk about the recent autumn statement which was more than likely that the ultimate throw the dice from the current government, probably only got March Budget next year to go before a general election the bookies’ favourite time for which is probably this time next year.

We’re going to look at some of the things that made the headlines some of the things that didn’t

My first headline from Thursday’s Times: Jeremy Hunt eases tax burden, which I completely disagree with, it’s simply not true. The tax burden is not going down at all.

Look at this chart, total tax revenue share of GDP, it’s going up for the next four or five years to 37.7%.

And I think the real message for this is you’ve got to use all of your tax allowances, ISAs pensions, income tax, inheritance tax, all of the allowance’s available, you’ve got to optimise absolutely every single one because the government are making so much money on tax receipts simply because they’re not moving any of the thresholds.

You can see that in this chart from the OBR over the next few years. This shows how many more people and how much money the government are going to take simply by keeping the income tax thresholds unchanged. I think the most interesting bars on here are the green ones and that’s people being pushed up from 20 into 40% higher rate income tax. And once you get into the higher rate income tax over £50,000, you start to lose Child Benefit, and that threshold hasn’t changed with 10 years. So that makes a huge impact. Bit by bit year after year. As people get pay rises inflation rises and they get more pay rises. This is one of the reasons the government is bringing in so much more tax revenue. Now they’ll claim that they’re cutting taxes that I mean this is just the Schrodinger’s Cat of tax cuts that they’re announcing at the moment that the cat is alive and dead at the same time. Taxes have been cut and raised at the same time, so it’s a bit baffling to see how it can be both. Somebody on that £50,000 threshold is going to be £754 better off next year. But actually, if the thresholds have increased since March 2021, they’d be £1,700 better off. So it’s just simply not true that the tax burden is going down.

This is public sector net debt, how much debt the government are in, that still forecast to go up. I’ve talked about that before, the measure used I don’t think is particularly accurate but either way it’s going up.

Inflation this is a problem for the government. They’re claiming the credit for the rate coming down even though they claim they don’t have any responsibility for going up in the first place. That’s a different matter altogether. It’s coming down but not coming down anywhere near as fast as they previously forecast.

And I think this is the big issue here, real GDP growth. The government are in such a bind that they’re trying to sell stagnation as a vote winner. And the OBR are forecasting that this year growth is going to be 0.6%, it’s going to be 0.7% next year 1.4% the year after.

This situation is so bad that the government are trying to claim that they’ve cut taxes, that’s actually made people poor, and that’s a success. I really don’t envy the current chancellor or whoever becomes the next chancellor. They’re in a real sticky bind. And I think both main political parties are betting on the economy growing to get them out of this muddle. Because if the economy doesn’t grow, they’re going to have to raise taxes even more. And that’s got to really be packaged up and delivered to the voters very carefully how they do that.

So let’s have a look at some of the things that didn’t make any headlines last week. Inheritance tax was touted beforehand, didn’t even have to mention. The £325,000 and £175,000 allowances are still frozen for the next five years, and actually the £325,000 allowance has been in place since 2009. So again, that’s a real fiscal drag that people are gradually passing over that threshold and the government are taking even more money on inheritance tax over the years.

Stamp duty that was rumoured beforehand, again not even mentioned.

ISAs specifically mentioned in the Treasury documents afterwards the allowances are unchanged that’s a relief. A few other minor measures back fractional share ownership and transferring ISAs, but for anybody watching I really don’t think that was any great significance at all.

Pensions got a little bit of a mention. Death Benefit treatment pre and post 75 is unchanged. There’s a one pot for life proposal, but I mean, unless they’re going to come up with some real amazing technology. I don’t think that’s going to see the light of day and it’s also going to be a real absolute headache for HR and Payroll departments.

They’re still going on about getting pension schemes to invest in unlisted UK companies. I’ve spoken about this before: I think it’s an absolutely terrible idea but they’re still going on with it.

And I think this cartoon now this this sums up what’s going on. That’s the government with the knife. They they’re trying to be your friend, but really all they want to do is get you to pay taxes, and with government debt interest being high and low economic growth, an ageing population, there is very little scope for any government of any stripes or colours to increase tax. They’re going to have to rely on economic growth to get us out of this.

Good luck to them. I don’t anybody who’s going to be Chancellor of the Exchequer.