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With so many announcements having been made before the budget I had been wondering what sort of bad news they were trying to bury. It has been over six weeks since the prime minister announced the pledge breaking increase in National Insurance and Dividend taxes coming in in from April 2022. Then we had the many leaks and announcements promising public sector pay increases along with investments in the NHS and infrastructure. How was this all going to be paid for?
It seems that amidst rapidly increasing inflation and serious issues in most sectors with staffing there was little wriggle room left to the Chancellor, Rishi Sunak, to change much at all. There was very little in new tax legislation changes announced. In tax terms it was very much a confirmation that the tax rises previously announced will continue, with a few give away items such as the alcohol duty reform and additional business rates reliefs but ultimately this was a spending budget not a tax centred budget.
Instead of tax rate changes he turned to data that predicts the UK economy will grow by more than expected, now forecast at 6.5% growth rather than the previous prediction of 4%, leading Mr Sunak to say he would be “funding through growth” much of the announced spending.
With inflation continuing to rise Mr Sunak made a point of saying that it continues to be government and Bank of England’s aim to bring this back under control. The Bank of England’s last assessment put inflation at 3.1%. It was announced in the budget that it is expected that this will peak at 4%. At this peak it will be 2% above the target set by government. We hope that while the pressures on inflation are seen to be international in nature this will not trigger interest rate increases as we saw before the 2007-8 financial crisis. Our webinar with the bank of England next month will certainly be one to watch as inflation is probably the biggest factor, after recruitment, affecting our clients at the moment.
For the third budget in a row the expectations that the government would make changes to Capital Gains Taxes or Inheritance Tax did not materialise. Having already put through tax rises on the big areas of Corporation Tax and National Insurance and dividend taxes it would seem the government didn’t want to make any further controversial tax increases. Is the government too scared to tinker further with the tax system or are they biding their time? Only time will tell.
In a budget that was light on tax, there is actually a lot that needs to be considered for the coming tax year.
We have pulled together all the announcements from across the year into a single place where you can see the tax changes that will affect you in 2022 and 2023.
Ultimately all our clients will pay more tax for the same earnings in the 202/23 tax year. It will also be a year of forecasting and planning to make sure our clients are structured in the most appropriate manor for the future.
Changes announced in the budget:
Some of the items discussed in our budget summary:
The tax system is certainly not looking to get much simpler next year, but that doesn’t mean we can’t help put the right plans in place for you and your business.
Click here to read our full summary.
There were also a number of other announcements concerning broader issues which are worth a mention.
Read the other announcements by clicking the button below.
“There is much to welcome in this Budget for business communities across the UK. The Chancellor has listened to Chambers’ long-standing calls for changes to the business rates system…This will provide much needed relief for businesses across the country, giving many firms renewed confidence to invest and grow.”
Shevaun Haviland, Director General of the British Chambers of Commerce
“This Budget has delivered some measures that should help to arrest the current decline in small business confidence. But, against a backdrop of spiralling costs, supply chain disruption and labour shortages, is there enough here to deliver the Government’s vision for a low-tax, high-productivity economy? Unfortunately not. Where inflation and forthcoming tax hikes are concerned, the clouds are gathering.”
Mike Cherry, National Chairman of Federation of Small Businesses