It had been billed as ‘tax day’ – the day that we would see the Government’s tax strategy outlined and a lot of briefings had suggested we would see an indication for future tax rises to come in the short or medium term. Predictions ranged from capital gains tax consultations to pension relief cuts.
Ultimately, a day which promised much, (even if it was to be bad news) actually delivered very little.
What wasn’t announced on tax day?
Before we look at what was included, there were a few key items which were conspicuous by their absence:
- Changes to pension tax relief
- Capital gains tax
- Online sales tax
- Gig economy workers
Future tax policies
There were 30 areas announced where the Treasury will be looking at in the future, including:
- Tax administration
- Tackling non-compliance
- Other tax policies
These measures will be targeted at making reporting more real time reporting. The document specifically mentioned that this could involve individuals and companies paying tax more often as the year progresses. This is something we have been predicting and will need a lot of work to achieve, but it is now a stated target, rather than something that has been assumed to be happening.
There will also be lower administration burdens on people recording Inheritance Tax details, where no tax is due.
There will be an increased focus on tax avoidance.
Within this category was a note that there would be a review of how changes to how people who provide their services via Personal Service Companies (PSC) would be taxed. This is already in place for public sector organisations and is starting for larger companies from April this year. However, it seems only a matter of time until this filters down to small companies.
In summary, if individuals are providing their services via a PSC, they could be deemed employed by the end customer in the chain. As preparation for this, businesses should be looking at who they engage on this business and how they would be affected.
Other tax day policies
Business rates will be reviewed generally as an overall concept. This will conclude in the autumn.
Rates in relation to people with second homes who are using them as holiday accommodation and that reduced business rates apply.
The Taxation of Trusts will be reviewed following previous consultations. Trusts have become less popular with penal tax rates recently and it would be unlikely to see these reversed.
VAT will be reviewed for more technical areas such as partial exemption and VAT groups.
Whether it was an exercise in PR and not giving the public too much bad news, only time will tell. We all know tax rises will come in the future, but for certainty in plans, we just need to know where and when. With the proposed corporation tax rate rises in 2023, perhaps there had been enough news thus far from a political view point.
We will, of course, keep you up to date with any of the results from the reviews and consultations.
If you would like to find out more about how these changes could affect your business, please do contact us and our specialist tax team will be happy to help you.