In the run up to today’s Budget, several announcements were trailed by press release, for example the increase in the National Minimum Wage from £8.91 to £9.50 for over 22s and the potential lifting of the public sector pay freeze.
There was the usual speculation about changes to pension tax relief and capital gains tax; however with the £12bn per annum Social Care Levy only having been announced in September, it seemed unlikely that there would be further tax increases. The questions really were: just how bad is the state of public finances; what measures could be taken to maintain the post-Covid recovery; and will interest rates need to rise to prevent inflation taking hold.
In the event, news of the recovering economy was reasonably good, with 6.5% growth pencilled in for 2021 and 6.00% for 2022. Inflation could average 4% next before falling again, so any rise in interest rates is likely to be modest.
The increase in the minimum wage was confirmed, and there was very little in the way of direct tax news.
The main points of interest were:
- The taper rate for the withdrawal of Universal Credit is being reduced, so that recipients who are working will be penalised less.
- There will be a 50% discount in business rates for retail and hospitality businesses for the 2022/23 year
- The time limit for paying capital gains tax on residential property disposals is increased from 30 days to 60 days
- The 100% capital allowances annual investment allowance of £1m will remain until 31 March 2023
- There are some technical changes to R&D tax credit scheme, including extending qualifying expenditure to include cloud and data costs
- A £1.4bn fund is being established to encourage inward investment in technology, particularly in the electric vehicle and life sciences sectors
- There are changes to alcohol duties, with some drinks becoming a little more expensive, and others reducing in price. Draught beer duty is being reduced but only on containers of over 40 litres – penalising small independent breweries.
If you would like to discuss any of the above please call your usual contact at Corrigan or email firstname.lastname@example.org.