Rishi Sunak didn’t raise the main taxes in a bid to rebuild the UK economy and tattered public finances. This was his second Budget and 14th fiscal announcement since succeeding Sajid Javid in February 2020.
The Chancellor has tried to take a balanced approach. He is continuing to prop up the businesses worst affected by COVID-19 on one hand. Then also setting out a roadmap to wean the UK economy off this emergency support.
Sunak has chosen a fine line between raising taxes to start paying down the massive Government borrowings but at the same time stimulate economic recovery and save jobs. He was mindful of pledges made in the Conservative Party manifesto not to raise income tax, VAT, and national insurance. So that leaves corporation tax, CGT, and inheritance tax.
Maybe he will delay the announcement of significant increases in taxation until later in the year. It is anticipated that there will be a further Budget in the Autumn. By then the economy will hopefully have started to bounce back. It has been announced that there will be consultation documents issued on 23 March. These will seek views on future tax changes. That may be when the expected reforms to CGT and IHT will be announced.
What has changed?
In the meantime, allowances and tax rates will freeze from next year. A tax rise by stealth where the government will allow fiscal drag to help fund the deficit.
For limited companies, the main rate of corporation tax on any profits they make will increase to 25% from 1 April 2023. Companies with profits less than £250,000 per annum will pay a lower rate.
The Chancellor announced a “super-deduction” of 130% of expenditure on qualifying plant and equipment. This is an innovative way of encouraging investment, and I can see this being an effective way for businesses to re-invest after the pandemic.
Where can I find out more?
Please see this link for our budget brief which gives more details about the budget. This includes details of the extension to the furlough scheme, new government-backed loans, stamp duty reliefs, help for hospitality businesses and help for first time property owners.
Head to the government website too if you would like to find out more about this budget. Click here to see the government standpoint.
If you need specific advice, please email your usual Jack Ross contact. They will be more than happy to help you. Alternatively, you can use the form below to get in touch.