For my private clients and family business owners, it was good to see no significant further tax rises beyond the 1.25% increase in the rates of national insurance and dividend tax that were previously announced to fund social care. Nevertheless, the tax burden as a result of this and the previously announced increase in corporation tax to 25% from April 2023 will be historically high.
The freezing of personal tax and other thresholds have a revenue raising effect given inflation in the economy, and further rises might have had the impact of further slowing our recovery from COVID-19, the best way out of our debt problems as acknowledged by the chancellor in his speech.
For businesses, the extension of the £1 million annual investment allowance for business investment until March 2023 will also be helpful, though some care will be needed to decide whether this, or the previously announced 130% “super deduction” for corporates, is more beneficial.
I am pleased the Chancellor did not raise the top rate of Capital Gains Tax from 20%, which have been the subject of much speculation. There is a need to look at whether capital gains tax rates incentivise the taxpayer appropriately, but maintaining a low rate for entrepreneurial activity and a lifetime of work encourages new businesses to set up and thrive. The differential rate of capital gains tax for residential property (up to 28%) has not significantly, in my experience, stopped investors from backing the housing market to continue to perform, particularly with further announced government backed support and investment in affordable housing and earmarked brown-field land for new homes.
The introduction of draught relief for beer and cider, reducing duty in pubs from 2023, will also be appreciated in the west country where I am from, as well as elsewhere, though perhaps not the duty increases for higher strength alcohol.
There will be tax avoidance measures to look at in the detail, and where there are ‘simplification’ measures, these often lead to an increased tax take. As ever, the devil will be in the detail of the budget documents
