Budget 2021 Update!

Well, after what a lot of the media and tax profession expected earlier in the year, Rishi Sunak's latest budget was a bit of a damp squib. I won't get into the political stuff, after all this is a tax blog and I'm sure that there are many better qualified than me to get into that debate!

So, what did we see from the Chancellor yesterday? Well, in the short term very little, as the principal changes for most people seem to have been restricted to freezing of tax allowances and tax bands, with no changes to rates of income tax, national insurance, or VAT. What happened to the much-vaunted changes heralded in the Office for Tax Simplification's (OTS) report on Capital Gains Tax (CGT)? Pretty much nothing, other than again freezing the CGT annual allowance for the near future. the same is true of Inheritance Tax (IHT), as we look forward to another twelve months of stagnation there too.

The biggest hit was reserved of course for Corporation Tax, and let's be honest that is a big old tax hike for business, but is it really? I only say that as none of the tax reliefs available to businesses have been scaled back, indeed additional reliefs have been added in or existing ones boosted. So, the matter of Corporation Tax remains one of choice, if you are reinvesting in assets, staff, or research and development that tax increase won't bite quite so hard. If anything it should increase the incentive for investment in existing corporate businesses. It's definitely 'glass half full' rather than 'glass half empty', but of course there will always be those who insist that it isn't their glass, their glass was bigger, and it was full t the brim!

That being said, this is very much a budget of its time. The UK economy is still greatly affected by the circumstances foisted upon us by the pandemic, and I am sure we will see further repercussions of the 'Brexit Experiment' as world economies start to open back up, so to go in hard on tax policy at this time would have been foolish on the Chancellor's part.

However, I'd caution it's still not safe to go back in the water just yet, but hopefully, it has given taxpayers a 6-12 month breathing space to follow through on any tax planning before the rulebook gets rips up again! Since Christmas I have seen a lot of clients trying to rush through projects that have been in the making for sixth months or more, all to get them done before budget day, my recommendation would be not to take your foot off the gas just yet...