The lead up today’s budget was filled with speculation of significant reform to the tax system, particularly capital gains tax, inheritance tax and pension tax relief to further recoup the cost of COVID measures that have been in place over the last 18 month or so. However, we are relieved to say that these did not materialise, although we would suspect that they have only been postponed rather than dropped altogether.
More likely, the position is that with significant tax increases announced in the Spring Budget, along with the bombshell of the Health and Social Care Levy (note it’s not a tax!), and the increased costs being faced in many other sectors of the economy, the Chancellor realised that now is not the time to squeeze the financially pressed UK public and businesses for even more.
Although the budget did confirm that the 1.25% Health and Social Care Levy (and related increase in Dividend Tax Rates) will be introduced from 6 April as planned, the only other notable changes to the tax rules are:
As was announced at the end of September, the introduction of Making Tax Digital for income tax, the reform of basis periods for sole traders and partnerships, and the change of the self-assessment penalty regime have all been delayed. More details of this can be found here (https://msactax.co.uk/news/common-sense-prevails-another-delay-in-the-roll-out-of-mtd/)
Looking outside of tax, there have been welcome changes to other areas that should help many individuals and businesses (such as changes to the Universal Credit rules, reductions in Business rates, and reductions to Alcohol duty). We will provide details of these changes (and more!) shortly.
Overall, we are pleased to say that it has been a relatively quiet day in the office.