After the U-Turn announced when the Chancellor, Jeremy Hunt, was initially appointed, today was the announcement of his and the current government’s plan to address their plans for economic stability, growth and public sector spending.
The pledge was to deal with the estimated economic shortfall, half by taxation and half by spending cuts.
The first announcements were around taxation and the need for fiscal responsibility. There has been a lot of talk in recent weeks about fiscal drag and we have seen the implementation of that with many taxation thresholds remaining the same until 2028, albeit that will be after the next general election. He has also reduced with effect from April 2023 the allowances for tax free dividends and the Capital Gains Tax Annual Exemption. This coupled with the increase in state pension will bring many more individuals into the Self-Assessment system.
The freezing of the VAT registration threshold will also bring many more businesses into the VAT regime.
Many of these allowances and thresholds were originally set to try to exclude many from the tax system unnecessarily, there is no doubt that these measures will produce an extra compliance burden on taxpayers and HM Revenue & Customs (HMRC).
The government also announced that it is investing a further £79 million over the next 5 years to enable HMRC to allocate additional staff to tackle more cases of serious tax fraud and address tax compliance risks among wealthy taxpayers, albeit there is no mention of additional resource to help them with customer services or existing compliance needs.
I don’t believe anyone expected, following the pandemic, for there to be tax cuts as previously proposed, but at a time of inflationary pressures and the associated impact on the cost of living these announcements will be to the detriment of very many individuals. The Chancellor has looked to help those people who require the most support, keeping the pensions triple lock and those on the lowest incomes with specific and more targeted measures. Meanwhile there is investment in growth and innovation to improve the overall economy in the long term and assist with inflationary pressures caused by global issues.
There was a focus on investment in our public services and also infrastructure projects and it was announced before the budget that the Air Balloon Roundabout A417 missing link work will go ahead, which will be a welcome investment in the county.
Articles will follow shortly to provide a summary of the key points from the Autumn Statement looking at business tax and personal tax.
If you have any questions for our Tax experts as a result of the Autumn Statement, please contact us on 01242 776000 or tax@randall-payne.co.uk.
