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We have a new Chancellor of the Exchequer, Rishi Sunak. In today's article, we'll look at what this means for your finances and your business.
Less than a month before the Budget, we have a new Chancellor. Sajid Javid, who had been in the role for seven months, was summoned to Downing Street and ordered to replace his special advisors with a handpicked team from Number 10.
Javid responded, "no self-respecting minister would accept those terms" and instead resigned from the role. A replacement, Rishi Sunak, was quickly named as his replacement.
Will this change anything? Will the new man be more business friendly (as has been suggested)? Will the Budget have any new surprises? Read on for the Key Business Consultants view...
Who Is Rishi Sunak?
Before his appointment, the new Chancellor was the Chief Secretary to the Treasury (the de facto number two in the department). Here are the basics:
- Born in Southampton to an Indian Punjabi family
- 39 years old
- Educated at Winchester College and Oxford (PPE)
- Investment banker (Goldman Sachs) and hedge fund partner
- MP (con) for Richmond
A typical route into conservative politics... What about his political and economic views:
- Campaigned for Leave in the referendum
- Was an early supporter of Boris Johnson
- Regarded as a strong supporter of the city
- Considered more likely to cut taxes
- Favours a "trickle down" approach to benefit workers
How Has The City Reacted?
Initial signs are that the city approves of the new appointment. Looking at the exchange rate on the day of the news:
- The pound rose 0.5% against the dollar
- The pound rose 0.6% against the Euro
Although they come from similar backgrounds (Javid made his name at Deutsche Bank while Sunak was at Goldman), they have a slightly different approach to fiscal policy. Tax lecturer Giles Mooney explains:
Sajid Javid believes in lowering debt with fewer tax cuts... Rishi Sunak is far more likely to cut taxes and keep debt levels high.
Let's look now at how his appointment might affect your finances and your business.
Taxes, Regulation & The Budget
It's no secret that Dominic Cummings is a big supporter of the new man. As such, the suspicion is that the upcoming Budget will be more influenced by politics than economics.
Cummings is desperate to reward new Northern voters (defectors from Labour's red wall) with some more populist proposals. These could include:
- Introducing a wealth tax or mansion tax
- Scrapping entrepreneur's relief or reducing the cap
- A restriction on pension tax relief for those earning more than £50,000
- Legislation to cut the cost of new-build homes
This Budget was already eagerly anticipated. Potential changes to IR35 and the Loan Charge were expected, both likely to affect small businesses and contractors. Now, with a new man in charge, all eyes will be on Rishi Sunak and the 11th of March.
If you are concerned that these changes will impact your or your business, you may like to consult with a specialist tax advisor to ensure that your affairs are organised in the most efficient way.
And if you'd like to discuss how we work with clients to help them grow, stay profitable and remain compliant, please get in touch.