Storm Rachel will be unlike anything Britain has ever weathered

A brutal tax assault will have swift and unavoidable consequences

Daily Telegraph 

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Meteorologists give names to storms these days so people take heed of the warnings about the risks to their lives and property. We are going to need a name for the financial storm that will make landfall during the first week of April.

While the Chancellor’s first Budget was delivered at the end of October last year, the real and tangible impact of most of her measures will not become manifest until the new tax year, which begins on April 6.

There are also some tax changes that take effect on April 1 – so the tax storm starts to build up gradually from the Tuesday and reaches gale force on the Sunday.

We’re calling it “tax horror week”, but maybe it should be called “Storm Rachel”? There have already been five Storm Rachels in the last 40 years – did we really need to have another?

This time it will mean horrifying tax increases inflicting severe damage to the economy, to businesses and to the wallets of British citizens.

One big announcement introduced immediately was of course the withdrawal of winter fuel payments for 10 million pensioners, so you would be forgiven for thinking the other horrendous decisions of Rachel Reeves applied immediately too.

But the shrieks of pain you have heard were from businesses and investors announcing decisions to cut back on staff, close down operations and ship out of the country before they are introduced in April.

Here’s a list of the April 6 tax changes to underline just how fierce the tax storm is going to be.

From April 6, the rate of employers’ National Insurance contributions will be increased from 13.8pc to 15pc, and the threshold cut from £9,100 per annum to only £5,000 – bringing many more low-paid and part-time workers into its ambit.

Also, the minimum wage will have already increased from 1 April by 6.7pc, providing a multiplier effect on the increase of employers’ National Insurance contributions.

Many businesses will be hit by large increases in rates as various reliefs are not renewed on April 1. Businesses in hospitality and leisure will see their bills increase from an average of £3,751 a year to £9,003 a year. Pubs with a rateable value of £100,000 will see business rates jump by £19,000 per year – and it is feared some 9,000 will close.

It has been calculated that to stay open, such pubs will need to sell an additional 60,000 pints a year – that’s 1,200 more pints a week or 170 extra pints a day. And that’s before rising energy bills, wages and other costs.

While the increase to the main rate of capital gains tax from 20pc to 24pc was immediate from October 30, business asset disposal relief (BADR) from capital gains tax – originally introduced by Labour to encourage entrepreneurs – and investors’ relief (IR) are both being hiked from 10pc to 14pc from April 6.

Also from April 6, non-dom status will be abolished, hastening the exodus of millionaires with that status, as few want their world-wide assets to be subject to inheritance tax at 40pc.

The supportive tax regime for furnished holiday lets will be abolished on April 6, forcing many owners to sell to second home owners, which will turn some locations into ghost towns.

Britain’s highly successful private equity industry will be made much less competitive by an increase in the rates of capital gains tax on carried interest to 32pc. Part of the industry will undoubtedly decamp to other countries with more favourable tax regimes.

Double cab pick-up vehicles will be treated as cars, with large increases on taxes due as a consequence.

Compounding the damage done by the imposition of VAT on school fees that was introduced on January 1, the eligibility of private schools for charitable rate relief for business rates will be removed.

The stamp duty threshold for first-time buyers will drop from £425,000 to £300,000. Moreover, home movers will now pay stamp duty on purchases over £125,000, rather than the current £250,000.

For example, based on the new thresholds and stamp duty rates, a home mover completing on a property worth £500,000 in England or Northern Ireland would pay £15,000 in stamp duty rather than the current level of £12,500.

Vehicle excise duty (VED) doubles for all new petrol and diesel models double, with some cars facing annual charge as high as £5,490.

Owners of even one of the most popular cars, such as the lowest emission Volkswagen Polo, will have to pay £220 more. VED on electric cars and hybrid vehicles will also shoot up.

And of course, council tax will rise again in April 2025, with local authorities in England permitted to increase bills by up to 5pc – 90pc plan to do so.

The average Band D council tax in England for 2024-25 was £2,171 – meaning a rise of £109 in council tax. Six councils have been approved by Angela Rayner to exceed the 5pc limit without holding a referendum: Windsor & Maidenhead, Birmingham City, Bradford City, Newham, Somerset and Trafford .

Already we are seeing the expectation of what Rachel Reeves’s Budget tax hikes will do to the economy, with businesses battening down for a tough economic storm, economic growth forecasts being slashed by the Bank of England, OBR and IMF – and now inflation reaching 3pc, and predicted to reach 3.7pc.

There can be no doubting Storm Rachel is all set to bring devastation across the whole of Britain the likes of which we’ve not seen for generations.

This is one forecast we can be certain of. No one can blame climate change for Storm Rachel though – it owes its origins to the decisions of the Chancellor, and no amount of deflections and excuses can shield her from the blame.