Poor old Hugh Dalton must be turning in his grave.  The extent to which Mr Sunak's Budget proposals had been leaked in advance makes one wonder whether there was much point in having the annual set-piece (not to say set-to) in Parliament at all.

All of the leaked content, and much of Mr Sunak's speech, was to do with expenditure or duty reductions; everything from building affordable homes and public transport in the provinces to business rate reductions and cheaper draught beer and sparkling wine.  A total increase in departmental spending of a hundred and fifty thousand million pounds by 2024/25.

But, we were asking ourselves as the Budget statement drew to its close, where are the tax rises to pay for all this?  Like many people, we were waiting with bated breath and trepidation for the announcement that rates of Capital Gains Tax (CGT) would be aligned with Income Tax; or that tax relief for pension contributions would be restricted to basic rate relief – both prominent among 'smart money' predictions ahead of the Budget.

But neither of those dogs barked.  In fact, Mr Sunak's peroration gave a pretty firm declaration of his intention to muzzle those and similar dogs for the duration of the Parliament:

"My goal is to reduce taxes.  By the end of this Parliament, I want taxes to be going down not up.  I want this to be a society that rewards energy, ingenuity and inventiveness.  A society that rewards work.  That is what we believe on this side of the House.  That is my mission over the remainder of this Parliament."

The absence from the autumn statement of any new general tax rises of any significance will come as a relief to many.  But a relief tempered by recollection of rises previously announced, which include:

  • Corporation Tax increasing to 25% from April 2023 for companies with profits above £250,000 (and to a lesser extent for companies with profits between £50,000 and £250,000)
  • Freezing of personal allowances, CGT annual allowance and Inheritance Tax (IHT) nil rate band at current levels until April 2026 – an effective tax rise of multiple billions of pounds over the period from 'fiscal drag'
  • The 1.25% Health and Social Care Levy on earnings and dividends introduced from April 2022
  • 4% Residential Property Developer Tax from 1 April 2022 (albeit only on profits exceeding £25 million)

So, what changes did Mr Sunak announce on the tax front?  Not many, actually; and some of those are refinements to what has previously been announced.  Some are of interest only to very specific sectors (changes to the Tonnage Tax regime, for example) but those few which might be of wider interest include:

  • 'Basis period reform' for the taxation of business income will be introduced in full from 6 April 2024, with transitional rules for the tax year 2023/24 (a deferral by a year from what was originally proposed). For more on what that may mean, take a look at our briefing here.
  • Annual Investment Allowance, due to drop to £200,000 from 1 January 2022, will now remain at its current level of £1 million until 31 March 2023
  • The deadline for reporting and paying CGT arising on disposal of UK residential property (and, for non-residents, direct or indirect disposal of UK real property of any kind) is to be extended from the current 30 days from completion to a more manageable 60 days (effective from 27 October 2021)
  • The rules allowing tax assessments to be made following 'discovery' are to be extended to ensure that they 'work as designed and intended' in relation particularly to recovery of High Income Child Benefit Charge, Gift Aid and certain pensions charges
  • Research and Development tax relief will be reformed (from April 2023) both by expanding qualifying expenditure to include data and cloud costs and by refocusing support towards innovation in the UK
  • Finally, (although not specifically a tax change) the Government is to consult on the possibility of permitting overseas companies to 'redomicile' themselves in the UK, which will in some circumstances add to business flexibility

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