As you will be aware, unless you've been living in a cockerel's boot, we are in the middle of a crisis.
It's a crisis with many faces, each having an impact on the other.
The health crisis means lockdown and restrictions on movement which in turn contributes to the financial crisis which, again, in turn leads to an increase in Government funding for businesses and employees. The stress caused by not working/being on reduced pay/unable to pay creditors creates further health issues which then starts going in a circle again. It's a harsh world at the moment but without Government funding, it could be a whole lot worse.
So, what is the purpose? Good question. Probably the only relevant question to be honest.
The purpose is to discuss briefly what the Chancellor may do to recoup the funds paid out due to C-19. It's pretty obvious that the money will need to be reclaimed once the economy gets moving again and anyone who thinks otherwise is living in cloud cuckoo land. What's the best way to raise money? Tax increases.
According to a leaked treasury report (as reported in the Times on Saturday), there are a few options available to Mr Sunak.
Without going into detail, the options are:
- Increasing income tax by 1% across the board - estimated to bring in £5.8bn a year,
- Increasing National Insurance by 1% - raising £4.6bn,
- Aligning self-employed National Insurance rates with employees,
- Increasing a flat rate for capital gains tax of 28%,
- A 1% increase in corporation tax - £2.4bn a year apparently,
- Scrapping the triple lock on state pension rises which could save a whopping £8bn a year
- Rental property tax increases - possibly an already overly abused target but a fair few past Chancellors hated rental investments,
- Wholesale changes to inheritance tax - maybe a reduction in the overly complicated residence nil rate band?
Whilst the above points are just options in a leaked report, it is clear that taxes will need to go up. In the Times report, one commentator suggested that they thought income tax rates would increase by as much as 5% for top earners and 3% for everyone else.
Tax planning has always been an option available to some and it continues to be important. If rates do rise substantially tax planning will be even more important.
At Gepp Solicitors, we have experienced and friendly people that can help you with your tax planning - whether it's deciding to take dividends or salary from your company to estate planning to obtaining stamp duty land tax refunds, we can help.