The first post-Brexit Budget is due to take place on 3 March, and speculation is gathering pace about what changes are to be announced.
Press articles over recent weeks have ranged from suggesting that the Chancellor will introduce a range of measures to increase tax revenue to recover the Government’s large amount of spending since the Covid-19 pandemic began, to suggesting that the focus will be on more Covid support measures for the time being, with tax changes to follow maybe in the Autumn.
Whilst we cannot say where on this spectrum the Chancellor will be on Budget day, it makes sense to be prepared for all eventualities.
Possible tax changes which have been suggested include:
– Increasing corporation tax
– Increasing capital gains tax – possibly to income tax levels
– Restricting tax relief for pension contributions for higher rate tax payers
Sensible planning steps might include:
– If you have the cash, you might consider accelerating your pension contributions pre-Budget
– Accelerating this tax year’s dividends to before the Budget
– If you are due to make a capital disposal at a sizeable gain, although time is now limited, considering whether it can be crystallised before the Budget
– If you have control of the timing of when company capital gains or income will arise, consider whether crystallising them before 31 March makes sense in order to ensure they are taxed at the current 19% corporation tax rate
In addition, whilst there has been no specific mention of inheritance tax in recent articles, consultation earlier this year would suggest that some changes may be on the cards at some point, although probably not as soon as this Budget. Accordingly, if you are considering business succession and passing shares to your family, the next few months may be the time to do so and take advantage of the currently generous inheritance tax and capital gains tax rules.
We will release more details as and when more information emerges on likely changes, and we urge all businesses and individuals who may be impacted by the potential changes to join us at our upcoming Budget event, taking place virtually on 4 March (the day after the speech takes place) – please register your place here. In the meantime, if you would like to discuss any of the above topics or receive advice tailored to you, please speak to your usual PM+M contact or get in touch at enquiries@pmm.co.uk.
