Today’s Budget was one of the most eagerly anticipated in a decade. The economic shock brought about by the outbreak of COVID-19, and the unprecedented support packages which were put in place last March, have led to a huge increase in Government borrowing. Many commentators feared that this could lead to knee-jerk tax rises, such as an increase in Capital Gains Tax, leading to some taxpayers racing to accelerate disposals ahead of 6 April.
As it turned out, Rishi Sunak decided not to tinker with CGT rates (for now), focusing instead on the company tax regime. For several years corporation tax rates have been reduced, with the ability to use companies and get money out as dividends becoming increasingly attractive. The government responded by putting up dividend tax rates so that the advantage was significantly reduced. Today the Chancellor announced that corporation tax will, from April 2023, increase to 25% for all but the smallest companies. This change is two years away, but owner-managers may want to re-evaluate their strategy as a result of this change, which has reversed some of the previous tax benefits of incorporation.
For others, the Budget will produce its usual mixture of winners and losers. Our regular ‘Top Ten’ summarises the main changes announced today that we think will be of interest to our clients and professional contacts.
As ever, we welcome the opportunity to discuss how today’s Budget affects you and/or your clients’ affairs.
Please click the link below to access our Budget summary
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