‘Punishment budget’ dropped after Brexit vote
The Chancellor George Osborne has withdrawn plans for an emergency ‘punishment’ budget - that could have resulted in higher taxes and lower levels of public spending - in the wake of the referendum vote for Brexit.
This spells good news for contractors, who have been stung as a result of several recent budget statements from the current Chancellor.
In an early morning speech designed to stabilise the global financial markets, the Chancellor said that the time was not right for a new budget. He said that any decisions on public finances would have to wait until a new Prime Minister was installed – a decision we now expect in September.
During the referendum campaign, George Osborne had suggested that an emergency budget would be necessary in the event that the UK voted to leave in order to plug a £30bn “black hole” in the public finances.
He had suggested that this plan, which was dubbed a ‘punishment budget’ by leave campaigners, could involve raising income taxes, inheritance taxes and cutting spending for the NHS, police and school spending.
The news that the Chancellor has chosen to drop this plan will be particularly welcome to contractors and freelancers who have received a poor deal from several previous budget statements from George Osborne.
In two budgets last year, one in March and another in July, the Chancellor targeted contractors and independent workers ahead of other groups.
First, by restricting access to travel and subsistence expenses for contractors and then restricting access to tax-free dividends which saw many people’s tax liabilities increase massively from April this year.
Miles Grady, Director of Umbrella.co.uk said: “A lot of contractors and freelancers have been hit in the pocket as a result of recent budgets from George Osborne, so his decision to suspend the emergency budget is welcomed by us.
“The full extent of the impact of Britain’s decision to leave the European Union is still unclear. But if tough decisions need to be made, then we hope that the Chancellor will seek to spread their impact more evenly over the population, instead of targeting small groups like contractors and freelancers.”