Isaac Delestre presents our analysis on the #Budget2023 changes to the tax system.

Watch live here:
The biggest change to personal tax coming next month wasn't announced yesterday, but is the income and NICs threshold freezes announced last year.

The additional tax burden for most basic-rate taxpayers will be about £500, while for most higher-rate taxpayers it will be £1000.
Isaac Delestre presents the changes to the lifetime allowance and annual allowance following yesterday's #Budget2023 announcements.
"If people are looking to save enough for retirement, the ability to save more in a tax advantaged pension might mean they can work less and still reach that goal – for example retiring earlier."

This would be "exactly the opposite of what the Chancellor is hoping for."
Isaac Delestre goes through the likely impacts to the changes to pensions tax in our #Budget2023 event.

"There are things to like in these changes, but they do highlight that there are parts of the pension tax system that are badly in need of reform."

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More from @TheIFS

Mar 16
Carl Emmerson presents on the public finance risks and the public spending in our #Budget2023 analysis event.

Watch live here:
The @OBR_UK are now among the most optimistic of forecasters on growth, and expect the economy to be 0.6% bigger in 2027 than under its previous forecast.

This would be stronger growth than under @bankofengland's forecast, but still poor compared to the long-run average.
Inflation may be coming down, but prices remain much higher than two years ago and earnings haven’t caught up.

@OBR_uk’s still projects that real household disposable incomes will be no higher in 2027 than they were in 2019.
Read 10 tweets
Mar 16
STARTING NOW: Spring Budget 2023 IFS analysis

Watch our overnight analysis of yesterday's #Budget2023 here:
.@PJTheEconomist opens our event with his opening remarks, followed by four presentations on the public finances and public spending, tax changes, the changes to Universal Credit and disability benefits and childcare changes.

Watch live here:
@PJTheEconomist: “The overall outlook for the public finances still looks difficult.”

“Tax continues to rise to its highest ever level,” but “even with very tight spending pencilled in from 2024, debt is barely falling.”

#Budget2023
Read 12 tweets
Mar 15
The expansion of free childcare entitlements is to exacerbate one of the largest distortions you are likely to see in a tax and benefit system, meaning some parents could be worse off overall even after a pay rise of tens of thousands of pounds.

#Budget2023 THREAD:
Free 30hr entitlements will remain unavailable when earnings cross £100k. That huge “cliff-edge” will now be extended to high-earning parents of under-3s, and increased sharply for many high earners with 2+ preschool children. This can lead to extraordinarily perverse incentives.
A parent with a 1 year-old and a 2-year old in England, paying an hourly rate for 40 hours a week for childcare, could see their disposable income fall by £14.5k if their pre-tax pay crosses £100k.

A parent in this situation on £130k would be worse off than one earning £99.9k.
Read 5 tweets
Mar 15
After a shallower recession in the short term, the @OBR_uk now expects the economy to be 0.6% bigger in 2027 than under its previous forecast.

This would still be a poor growth performance compared to the long-run average.

#Budget2023 Chart shows forecasts for growth, real GDP indexed (2019=100
Borrowing in the later forecast years was revised down, by £17 billion or 0.6% of national income.

However, this still leaves borrowing higher than in the forecast produced before Russia’s 2022 invasion of Ukraine. Chart shows successive OBR borrowing forecasts. Title states
A bigger workforce and stronger-than-expected tax revenues allowed the Chancellor to meet his debt target by a margin of £6 billion, similar to in November.

This margin is tiny relative to the uncertainty involved.

#Budget2023 Chart shows OBR forecasts for debt as a share of national in
Read 4 tweets
Feb 3
The government has announced that Local Housing Allowance (LHA) rates, which determine the maximum amount of housing support available to private renters in the benefit system, will remain frozen at their Sep 2019 level for 2023–24.

THREAD 1/7 on the consequences for recipients:
Back in 2012–13, Local Housing Allowance (LHA) rates were set to the 30th percentile of rent in the area.

This meant a family on benefits could rent one of the cheapest 30% of homes in their area and have their rent fully covered if their income & assets were low enough.

[2/7]
But the next 7 years saw LHA uprated by a mix of CPI inflation, 1%, and zero, resulting in significant gaps in housing support.

In 2020 the government returned all LHA rates to the 30th percentile of local rents as of Sept 2019, but they've been frozen at that level since.
[3/7]
Read 7 tweets
Feb 1
NEW: Successive changes to the UK benefits system have pushed more people into work, but usually into part-time, low-paid work with limited career progression.

THREAD on our @NuffieldFound-funded IFS Deaton Review chapter on benefits and inequality [1/8]
ifs.org.uk/publications/b…
Working-age benefit spending steadily increased between the late 1970s and 2010, both in real terms per capita and as a share of GDP.

Policy choices since 2010 have reduced working-age benefit spending. About half of all benefits spending now goes to families in work.

[2/8] Chart shows working-age benefit spending (2021–22 prices)
Tax credit reforms in the late 1990s and early 2000s, and the introduction of universal credit, have incentivised benefits recipients to move into part-time work.

But things have gone in the opposite direction for moving from part- to full-time work.

[3/8] Chart shows share of earnings lost in higher taxes & reduced
Read 8 tweets

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