Welcome to our summary of the changes announced in the Budget on Wednesday.
You will have undoubtedly already read numerous different summaries and commentaries on the changes announced by Rachel Reeves in her first budget. This note is not intended to challenge or dispute the opinions of well-respected luminaries (Robert Peston et al) but is intended to offer some practical thoughts and insights on how changes to the tax system might affect the majority of our clients, who include self-employed sole traders and owners of limited company businesses, pensioners, landlords and high net worth individuals.
Even though the government stumbled over its definition of “working people”, we are pleased to see that predictions of major changes to the structure of owner managed company remuneration have largely not come to pass, with dividend tax in particular seeing no changes for the remainder of the current tax year. We are also very encouraged by the government’s position on corporation tax that there will be no changes to corporation tax for the remainder of this parliament. However, the changes for employers, both in regulation and employers’ national insurance, are concerning. It is unlikely that the full implications of these changes will be seen for some time but we see some suggestions that increased costs to employers may impact on future pay growth which is undoubtedly not what the government intended. As expected, this Budget resets the ideological focus of the tax system by introducing changes aimed at the wealthy, including increases in CGT and IHT, particularly for business owners and farmers, and changes to the “non-dom” regime. These changes are all quite controversial and it remains to be seen how effective they will be.
Our last note observed that we were living in tumultuous times, with significant changes in economic policy under the last government. Although inflation and the cost of living crisis has eased for many in recent months, there is no doubt that today’s announcements will create fresh challenges for individuals and businesses alike. That said, despite the anticipation and concern over the Budget in past weeks and an acknowledgement that taxes are increasing for some, our overall feeling is that it could have been far worse. For now, the economy is buoyant and we must take some comfort from this fact, even in the face of the largest increase in the overall UK tax burden since Norman Lamont’s budget in 1993.
This briefing note provides updates and commentary on the following issues:
- Tax thresholds
- Corporation tax
- CGT
- National minimum wage
- Employers’ national insurance
- Inheritance tax
- SDLT
- Business rates
- VAT, duties and other matters
- Reminders of existing changes
As always, with all areas discussed below, if you are unsure of the impact this may have on you, please get in touch and we will be happy to discuss in more detail. Please remember that, in terms of practical implementation, detailed legislation is yet to be released but we will confirm as much as we possibly can.
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