“Raising the tax-free personal allowance will boost take home pay of working households and we expect that overall this will stimulate household expenditure, reinforcing the demand-led recovery. Whilst we welcome the introduction of the national living wage, there is a risk that young, low earners will fall through the cracks, by not qualifying for increases in personal allowance or minimum wage, and additionally seeing their welfare support frozen or cut. This Budget risks leaving them behind.
“The public sector as a whole has come out as a winner in today’s Budget, with large increases to expenditure throughout the parliament, compared with the March budget, thanks to a gentler consolidation towards fiscal balance, greater reductions in welfare spending and some net tax increases. However, civil servants may not be cheering, since public sector pay rises are limited to 1% per year.
“The Chancellor has addressed the urgent need to boost productivity through investing in skills and infrastructure - measures which will be very much welcomed by business. Businesses also gain from reductions to the corporation tax but specific taxes on insurance, as well as a clampdown on tax avoidance, will hit some firms.
“Looking ahead, the success this Budget will be measured on is whether it can deliver the productivity growth which underpins OBR projections for the economy.”
- ENDS -
Ann Burton, KPMG Corporate Communications
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KPMG LLP, a UK limited liability partnership, operates from 22 offices across the UK with approximately 12,000 partners and staff. The UK firm recorded a turnover of £1.9 billion in the year ended September 2014. KPMG is a global network of professional firms providing Audit, Tax, and Advisory services. It operates in 155 countries and has 162,000 professionals working in member firms around the world. The independent member firms of the KPMG network are affiliated with KPMG International Cooperative ("KPMG International"), a Swiss entity. Each KPMG firm is a legally distinct and separate entity and describes itself as such.
This article represents the views of the author only, and does not necessarily represent the views or professional advice of KPMG in the UK.