Date posted: 7th Dec 2020
As fans of Game of Thrones will attest, the phrase “winter is coming” was used throughout the show. In a similar vein, following the postponement of the autumn budget, we know that a budget will be presented in the first quarter of 2021, for the 2021/22 financial year.
Given the that government’s reserves are depleted due to the current COVID-19 pandemic, we are anticipating that taxes will rise to replenish the reserves and we can see a number of ways that this could happen:
- Reduction of the tax relief associated with pension contributions – whilst this presents a myriad of issues, that have forced previous government’s to leave this relatively untouched apart from changing allowances, it could come back to the fore given that the tax relief associated with pension contributions is higher than the defence budget.
- Increasing capital gains tax – there are a myriad of proposals to increase the capital gains tax take, including increasing rates, decreasing annual allowances and further tightening on reliefs.
- National insurance increases – with a main rate of 12% for PAYE employees and a higher rate of 2% for higher earners, these low “tax” rates could be targeted to replenish reserves.
- Simply increasing tax rates for individuals and corporates.
We also would not be surprised if there was an announcement regarding a consultation in relation to bringing in a wealth tax.
It may be the case of “making hay whilst the sun shines” now, rather than risk future increases in taxes. As ever, our tax team are here to help you determine any tax liabilities on chosen courses of action. Contact us here.
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