Budget Predictions
29 Sep 2021
With the Budget being announced on 27 October, here we outline some of the potential predictions of what the Chancellor may announce.
Interest Rates
If high inflation persists into 2022, it seems likely that the Bank of England will have to act and increase interest rates at some point during the year.
Future tax rises
After the announcement of the Corporation tax and NIC increases there are hints that there won't be more tax rises in the Budget, but it is safe to assume that future tax rises might still be a possibility. However, these are unlikely to take effect immediately and are much more likely to be of the 'stealth' variety.
IHT and CGT
Lots of commentators are also predicting changes to Inheritance Tax and Capital Gains Tax following recent 'simplification' reviews by the Office of Tax Simplification. It would be quite straightforward for the Chancellor to 'simplify' many IHT rules, that could result in increasing future revenues. Increasing Capital Gains Tax, possibly by aligning with Income Tax rates, would be a more visible tax rise. However, in the light of the NIC increase, perhaps making technical changes that cut back CGT reliefs is a more likely option.
Corporation Tax
Corporation tax is already set to rise in 2023, coupled with many of the Covid support schemes coming to an end (the Furlough scheme and Business Rates reliefs being some of these), it seems unlikely that the Chancellor would risk many more business tax increases, but that doesn't mean that the Government can't increase its tax take from businesses in other ways.
R&D tax reliefs
The review and consultation into improving the UK's R&D tax reliefs may result in announcements of enhancements to R&D reliefs – perhaps even higher rates of relief.
Kickstart scheme
With the end of the Furlough scheme, job creation and skills shortages are expected to be addressed and an extension to the Kickstart scheme and other schemes to boost youth employment can be expected.
Tax reliefs for investors
It is possible that venture capital tax reliefs for investors, such as EIS, SEIS etc, will be enhanced to boost business investment now that the UK is not restricted by EU rules.
Business Rates
With the promise that the final findings from the Government's Business rates review would be published this autumn, there is a possibility that reform will be made regarding business rates. Most, however, believe that this will not be the case, with the consensus being that Business Rates will remain the same for now. However, it is clear that the Government is trying to improve the way the tax works and is likely to announce a consultation on technical changes.
Pensions
With the announcement that the triple lock for State Pension is to be “temporarily” set aside, due to the current high rates of wages growth pushing up pensions faster than general inflation, it is assumed that the State Pension, too, will probably increase in line with inflation.
Climate Change
With the climate change summit later this year, making the UK economy carbon neutral will be a key feature. This could mean higher costs for gas, oil and other non-renewable suppliers. These costs will, unfortunately, be passed on to the consumers.