Could The Cancelled Budget Give You More Time To Prepare?
With the Autumn Budget scheduled for the end of November, now cancelled, taxpayers have extra time to consider the likely tax rises coming down the tracks. The next Budget is not currently set at any particular time, but at this stage it might be anticipated to be in March 2021. Now that you’ve been given more time, should you undertake some planning before that?
The most popular view currently is that the Chancellor will initially target perceived wealth, with Capital Gains Tax (CGT) and Inheritance Tax (IHT) in his sights. Both taxes have been the subject of recent HMRC consultations and we have set out some of the possibilities below:
- A removal of Entrepreneurs’ Relief for CGT, thereby removing a possible 10% tax rate on eligible gains. This relief has been restricted in recent Budgets and now seems likely to be removed, though possibly replaced
- The abolition of the CGT annual exemption
- The alignment of CGT rates to income tax rates
- The abolition of CGT reliefs such as holdover relief, typically used by families to pass assets down generations
- The removal of Business Property Relief and Agricultural Property Relief which has allowed family businesses to be passed down to future generations without large IHT bills on the wealth passed
- The complete abolition of IHT and replacement by an annual wealth tax.
On top of the above, some Sunday newspapers voiced concerns that the government intend to increase the corporation tax rate to 24% (currently 19%) and that wholesale income tax rises were coming. A sales tax for online trading has also been mooted as a likely tax boost. Whatever measures the Chancellor might take, we’re not expecting any major tax giveaways unless, for example, infrastructure or research projects are further incentivised.
The above is pure speculation on our part and should in no way be taken as a prediction for the Budget, but nevertheless we all realise that the piper will need to be paid in due course as the UK seeks to come out of the current pandemic. Tax rises are certain to come down the tracks and a call to one of our Taxperts will allow you to consider your strategy to avoid the Chancellor’s accelerating steamroller!