X

X

Legal experts comment on today’s Budget: Chancellor proposes to increase overall tax take by stealth

tax

James Austen, Partner at Collyer Bristow, comments:

“Once again, the Chancellor defied those predicting significant increases in personal taxation.  Instead, he is proposing to increase the overall tax take by stealth, inasmuch as that by holding bands at their current levels further into the future, more taxpayers are dragged into the tax net – and at the higher rates.”

“This is a classic political ploy, and it does raise the question as to whether the plans will turn out to be sustainable.”

Jenny Cutts, Partner and Head of Private Client at Wedlake Bell, comments:

“The much-predicated tax hikes did not arrive in the Autumn Budget. However, with the freeze on tax allowances in the March Budget Speech and the introduction of the “NHS” tax by increasing National Insurance announced by the Prime minister earlier this year, the Chancellor is relying heavily on fiscal drag to fill up the Treasury coffers.

As the costs of living rise and wage inflation increases more people will fall into the tax net and taxpayers will therefore, pay more tax as they move into the higher rate tax brackets. This is a less provocative way of increasing the tax take compared to raising the tax rates.  

Some will question whether it brings those who can least afford it into the tax net, and it remains to be seen whether this Chancellor will introduce more radical tax reforms and rates to balance the books later in his tenure.” 

Oliver Embley, Partner at Wedlake Bell, comments:

”The Budget was fairly quiet for private individuals, and it was a relief to many that the anticipated rise to Capital Gains Tax (”CGT”’) did not go ahead.  We welcome the approach taken by the Chancellor as a higher rate of CGT would disincentivise taxpayers from making taxable disposals and could ultimately result in less tax being raised. 

There was some further positive news for individuals who own second homes, buy-to-lets, or holiday homes buried in the detail of the Budget.  For those who sell or gift residential property from 27 October 2021, they now have 60 days (rather than 30 days) from the date of completion to report any gains to HM Revenue and Customs and pay any CGT owed.

This is a common sense approach and it allows individuals time to obtain accurate valuations and calculate their CGT liability without the worry of a penalty.”

Marilyn McKeever, Partner at BDB Pitmans, commented:

“Private wealth advisors and their clients will be raising a glass of (reduced duty and much cheaper) English sparkling wine to the lack of Budget announcements relating to capital gains tax and inheritance tax.

Apart from an extension of the deadline for reporting and paying CGT on property transactions from 30 to 60 days-a welcome practical move-this was the Budget dog which didn’t bark, despite fears of rate increases and withdrawal of reliefs in the run up to the spending review.

This is not really surprising; neither tax raises Covid-hole filling amounts of revenue and now is not the time to discourage entrepreneurs and other investors in the economy by making the UK a less attractive place to invest and do business. That is not to say that reform is off the agenda and indeed there are good arguments that reform is needed.

The Office for Tax Simplification (OTS) have produced major reports on both CGT and inheritance tax over the last couple of years and have made proposals for a radical rethink on what the taxes are for and how they should operate.

If the government does decide to reform these taxes one hopes this will be done through a wide ranging consultation process to ensure that the new regime is properly thought through and fit for purpose.”

This Week’s Most Read

Latest IFA Magazine Podcast Episodes

Keep updated on the most important financial events 

Make sure you are an informed

wealth professional..

Adblock Blocker

We have detected that you are using

adblocking plugin in your browser. 

IFA Magazine