The Autumn Statement has been set for November 22, when the Chancellor Jeremy Hunt updates MPs on the country’s finances and the Government’s plans for tax and public spending, based on the latest forecasts from the Office for Budget Responsibility.
Rumours are already swirling about what he might or might not do, so here are our thoughts.
At a time where tax revenues are at their highest, and the cost of living has risen, there still seems to be pressure for the Government to increase taxes to collect more. However, any such move will not go down well with the Tories and is never popular with the electorate.
That said, neither the Chancellor nor the Prime Minister have shied away from introducing difficult taxation or political changes so we need to bear this in mind to understand if we think taxes will change.
Already, some tax plans are known: the annual Capital Gains Tax exemption is halving to £3,000 in 2024/25; the basic rate band is frozen to 2027/28 (which brings more tax revenue); the VAT limit is frozen at £85k; and the annual pension contribution amount has risen to £60k per annum, and the lifetime limit has been lifted.
What might the Chancellor change?
We think it is unlikely Income Tax bands will be touched. However, few would be surprised if Capital Gains Tax (always a hot topic) increases.
Inheritance Tax is again in the news, with rumours that it might be abolished. The last big change to this was in 2017, when the tax-free amount was increased following the introduction of the Residence Nil Rate band. On balance, we don’t think this is likely to change.
VAT has also been getting a lot of attention, with increasing numbers of businesses needing to register as they reach the threshold, and HMRC being painfully slow in sending out VAT numbers (you can read more in our recent blog). The Government seems determined not to lift the threshold so, again, we believe this will remain unchanged and more businesses will continue to need to be VAT registered.
We do think the Chancellor might look at the electric car tax. Currently rates are frozen until 2025, but they could be in line for an increase.
What we would like to see is action taken on tackling inflation and reducing interest rates, which is affecting thousands of people coming out of their fixed mortgage rates. This puts pressure on wages, which in turn puts pressure on businesses.
We await the Autumn Statement with interest!
If you would like to talk to our tax team about VAT or any other tax matters, please get in touch. We work with business owners in Swindon, Wiltshire, Cheltenham, Gloucestershire and the wider area.