There is growing speculation over what the 2021 Autumn Budget may hold for UK taxpayers – especially given the recent announcements made by the Government.
With a huge budgetary black hole to fill caused by COVID, the Treasury has already outlined three key changes to policy:
- A 1.25 percentage point increase to National Insurance
- A 1.25 percentage point increase to dividend tax
- The suspension of the pension triple lock.
These three recent changes go against key pledges made by the Government when they came to power and it has left many wondering what surprises the Chancellor’s next speech on 27 October may contain.
At the moment, theChancellor seems somewhat constrained when it comes to raising taxation further, especially if he doesn’t want to damage the economic recovery that is now well underway.
As a result, it is unlikely that he will raise corporate taxes significantly, which means that a tax-focused on personal wealth is more likely.
Chief among the speculated targets is reforms that are likely to affect Inheritance Tax (IHT) and Capital Gains Tax (CGT).
IHT revenue has been rising fairly quickly during the last decade, driven by the hike in house prices.
The Chancellor could look at ways of maximising revenue through IHT by restricting reliefs and exemptions without altering headline tax rates, therefore, creating a tax rise for the wealthiest families.
Similarly, restrictions to CGT allowances would only hit those disposing of valuable assets, property or businesses but would have a minimal impact on the day-to-day costs of running a company.
With a freeze on personal tax already in place until 2026 following the last Budget, the Chancellor could look to go further and target pension allowances, an area where revenue could be raised by lowering the £40,000 annual allowance together with restricting other reliefs.
Apart from the announcements made last month, little is known about what the Budget may include. That is why and individual taxpayers need to be prepared to adapt their tax plans quickly to the changes announced.
If you would like tax advice on measures announced in the Budget later this month on 27 October, please contact your Seymour Taylor representative today or email enquiries@stca.co.uk or call 01494552100.
We will be producing a summary of the Budget announcement on our website, which will be available on 27 October 2021.
This blog is for guidance only, professional advice should be obtained before acting on any information contained herein. The information was correct at the time of publishing 8 October 2021.