Mat from MBE Accountancy Breaks Down the Budget
This Friday, it was finally Mat Johnson’s turn from MBE Accountancy to step into the spotlight—and it was worth the wait.
With 17 members in the room, we swapped referrals and celebrated £10,700+ in passed business. But the highlight? Mat’s deep dive into the recent Budget. Not the headline fluff you hear on the news—but a proper, detailed breakdown of what’s really going on, who’s being hit, and what’s likely coming next.
Mat’s Verdict? Individuals are Being Quietly Squeezed.
While limited companies and VAT thresholds were mostly untouched, individual taxpayers are the ones feeling the pinch. The biggest stealth move? Frozen tax thresholds—unchanged since 2021—which Mat calls “fiscal drag”. If those had risen with inflation, we’d all be better off. As it stands:
- Someone earning £30K/year is down £596/year
- On £60K/year? You’re stung for £2,542
And no one’s talking about it.
The State Pension Time Bomb
Mat flagged a future crisis few have spotted—State Pension could soon exceed the Personal Allowance. That means retirees might owe tax on their pension alone. The government hasn’t said how they’ll handle it. Even Martin Lewis didn’t get a straight answer when he asked.
Dividend & Rental Income: The Family Business Hit
Dividend tax is up 2% across the board—except for the wealthiest, oddly left alone. Mat explained how this hurts family-run businesses running low-salary, high-dividend models. For a typical two-director setup, it could mean £696 less in your pocket.
Rental and savings income also got hit with the same 2% tax rise. Why? The Chancellor’s claim is to “level the playing field” with earned income, which has National Insurance added on. But Mat rightly pointed out—landlords take on risk. Employees don’t.
Holiday Let Tax Rules: A Mess
Big changes coming for holiday lets from April 2025. The tax benefits are being stripped away and reclassified like standard rentals. The net result? Even with the same income and expenses, owners will now report profits where there were none before—which will impact:
- Student loan repayments
- Child benefit thresholds
- Mortgage affordability
In Mat’s words: “She’ll have been drinking a coffee in the kitchen when she thought of that—hasn’t thought it through.”
Mansion Tax Incoming
From April 2028, a mansion tax kicks in for properties over £2 million. It won’t go to your council—it’ll go straight to the Treasury. Mat laid it out:
- £2–2.5M = £2,500/year
- £2.5–3M = £3,500
- Up to £7,500 for homes over £5M
Will it affect most of us? No. But it sets a precedent.
Other Nuggets
- Salary Sacrifice Pensions capped at £2,000. Too low to be meaningful, especially for higher earners trying to plan for the future.
- Electric Vehicles to start paying road tax via mileage (3p/mile for electric, 1.5p/mile for plug-in hybrids). Mat’s take: “Great idea, no clue how they’ll do it.”
- Energy Bill savings? That headline £150 is already being eaten up by rising prices.
- Universal Credit cap on two children removed. Controversial. Mat crunched the numbers: some families on full benefits now receive £46K/year tax-free, vs £28K for a dual-income family on National Living Wage.