In tax terms the Budget seems to be more interesting for what it doesn’t contain than for what it does. There is no mention, for example, of the rise in capital gains tax (CGT) rates which had been the subject of plenty of press speculation, nor of any changes to the way CGT interacts with inheritance tax on death. Similarly, no mention of a wealth tax or the windfall tax on landlords proposed by the Green Party in order to pay a £320 contribution to every UK household’s energy bills.
We already know about headline tax rises; the freezing of allowances, the 1.25% Health & Social Care Levy, the rise in corporation tax in 2023. It seems that these, along with a better-than-expected OBR report on the state of the economy, will fund the increased spending on health, social care and education, amongst others.
So, for private clients, the Autumn Budget and Spending Review contained little that was new. For the self-employed there is to be a change to tax reporting periods, modernising the way that trading income is allocated to tax years and doing away with some of the more arcane rules, particularly those applying in a business’s early and final years. Transition to the new rules is expected in 2023/24 and so anyone with a self-employed business should be aware of the changes and seek advice to ensure relief is claimed for any profits effectively taxed twice in the early years of trading.
Capital Gains Tax
Since April 2020, anyone selling UK property that results in a CGT liability has had to report that liability and pay the tax within 30 days of the disposal. That 30-day deadline has been found to be insufficient for taxpayers to produce accurate figures, especially in more complex cases. Consequently, for disposals after 27 October 2021, the deadline is to be increased to 60 days. The new rules will also clarify confusion around mixed use properties, confirming that only the gain on the residential portion needs to be reported and paid within the 60-day deadline.
On pensions, it was confirmed that the minimum age at which registered pension scheme members can take benefits is to increase from 55 to 57, with effect from 5 April 2028. Certain occupations, such as the police and firefighters, are given protection from this increase. Significantly, there were no further curbs on tax relief for contributions, or, indeed, any of the other privileges currently enjoyed by registered pension schemes.
Other items of note
Announcements which could affect private clients in a more indirect way include an overhaul of the taxation of institutional investment structures and some technical tweaks to business tax to encourage investment. A 4% tax on property developers with profits over £25m in order to help fund remediation work on unsafe cladding may indirectly help property investors too.
Otherwise, this was an upbeat budget focused more on spending than on raising taxes. As though to confirm the positive tone, the Chancellor cancelled the planned rise in fuel duty and froze the duty rates on beer, cider, wines and spirits for another year. Cheers!
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