With the national debt now tipping over £2 trillion for the first time ever, it is becoming obvious that the Chancellor is going to make some tough decisions on what tax rises are needed to pay it all off ...
The COVID-19 support measures have been welcomed by many across the country, and schemes like CJRS and SEISS have helped a lot of businesses retain staff and keep trading.
So, what tax changes are being considered for the Autumn Statement? Well, the Treasury has been calculating a number of tax increases, with various degrees of reluctance from the Chancellor, Number 10 and backbench MPs.
The rumours that have been in the press recently include :
- Corporation Tax raising from 19% to 24%
- Capital Gains Tax to be aligned to the Income Tax rate of the taxpayer
- No more higher-rate Income Tax relief for pension contributions
- Simplification of Inheritance Tax
- Rolling out the Online Sales Tax
- Redirection of part or all of the Foreign Aid budget
- Fuel and alcohol duty may be increased
However, it does look like Income Tax rises are not on the cards and no form of Wealth Tax will be considered. There may be rises in Council Tax, so this will impact homeowners dependant on the size of their property.
No decisions have been made yet, though the Chancellor is looking to raise another £12 billion per year, so it has to come from somewhere!
We'll have to wait and see what Rishi Sunak announces during his Autumn Statement in Parliament, though I believe the reports simplify what's going to happen, and there'll be a hybrid package of spending cuts and tax rises to help pay off the national debt.
My advice to any individual taxpayer is to always be aware of what reliefs are available and to definitely create a tax plan with your Tax Adviser. Owner-managed businesses will need to review their cash-extraction strategy and look into the likes of R&D reliefs and other deductions such as capital allowances.
And entrepreneurs are facing the loss of the Entrepreneur's Relief since the lifetime limit was reduced to £1 million, EIS and SEIS may also be tweaked, so I suggest watching the Autumn Statement closely.
It's a little worrying that there is talk of the Triple Lock being removed from the State Pension and that those in their 40s will now have to wait a further 2-years before they can access their private pension funds.
If you'd like to find out more about anything I've written here, do call me on 01908 774323 or leave a comment below and let's see how I can help you.