Country Life's cultural commentator Athena takes a closer look at last week's budget and foresees trouble ahead.
It’s strange how the appearance of a Chancellor holding a dispatch box on the steps of No 11, Downing Street remains so firmly attached to the ritual of the Budget. The eagle-eyed may have noticed last week that the box in question did not bear the monogram of Charles III, but of his mother, Elizabeth II. In these difficult days, a new dispatch box is perhaps deemed an indulgence. After all, in years gone by, it seemed to hold important secrets. Now, with so much of the Budget being trailed or leaked in advance it seems rather less significant.
Despite this, the Budget has preyed upon everyone’s mind to an unusual degree. That’s partly because the fiasco of the 2022 ‘mini-budget’ has shaken us out of the complacency that our leaders necessarily know what they are doing. Also, because the mood music of the Government about the state of the nation’s finances has been so remorselessly gloomy, we have all been expecting unwelcome news.
Right or wrong, the scale of the tax rises and borrowing has, indeed, been breathtaking and the Chancellor herself has admitted that this is not a Budget she would wish to repeat. Higher taxes are never welcome and force everyone who pays them to think again about their finances. How that plays through time and the system is almost impossible to judge, but there will be cultural consequences.
The effects on those with substantial assets are perhaps the most immediate and easiest to predict. Even before the Budget, for example, Athena heard anecdotally of two major country house restoration projects that were threatened by rumour of tax increases. The abolition of non-dom tax status will probably see them — and others — abandoned or fundamentally changed. Of course, whether readers regard that as regrettable or a desirable change will depend on their politics. Regardless, there is at least a clear cause and effect here.
Much harder to appreciate are the long-term effects of changes to our massively complex tax system (not to mention their unforeseen consequences). One such, for example, concerns the reforms announced to business property relief and agricultural property relief. From April 6, 2026, these will be combined, with a 100% rate of relief on the first £1 million of property to ‘help protect family farms and businesses’ and 50% on everything thereafter. The stated intention is to ‘target’ the relief and prevent ‘the very largest estates paying lower average effective inheritance tax rates than smaller estates’.
This strikes Athena as misunderstanding the nature and value of great estates. As Historic Houses has been quick to point out, the change will ‘unquestionably see the sale and break-up of family-run business and farms, and in doing so, damage the rural economy’. In the process, it will also divert funds from repairs to historic buildings. Is this really a change in our collective future interest?
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