Almost a year on from the first national lockdown, the UK remains in the grip of a pandemic. With the Government’s borrowing at a record level, today’s Budget largely focused on mitigating the effects of the virus on the economy and supporting those most affected by the downturn.

To the relief of most taxpayers, it therefore appears that tax rises for individuals will not be happening immediately.

Inheritance Tax and Capital Gains Tax

Perhaps surprisingly given the amount of industry speculation on these taxes in recent times, the Budget did not announce any changes to Inheritance Tax or Capital Gains Tax (CGT). With CGT being out-with the Conservative Party’s ‘triple lock’ against increases to income tax, national insurance or VAT, many saw IHT and CGT as a prime target short term revenue raising.  In the event, no changes came to pass.

Income Tax

While income tax rates are not set to increase, the thresholds for payment of tax are to remain as they are and not to rise with inflation.   Indeed, personal income tax allowances, both basic and higher, are to be frozen between April 2022 and 2026.

Corporation Tax

With an eye to businesses hopefully benefitting from the reopening of the economy, perhaps the headline announcement in this Budget is an increase in the rate of Corporation Tax. The UK’s Corporation Tax rate of 19% is markedly lower than its fellow G7 countries and is now set to rise to 25% from April 2023, by which time the Government is clearly hoping that businesses, for the most part at least, will be back on an even keel.

The Future

Much work has been done in recent times by Government, think tanks and industry bodies to look at the potential reform of capital taxation in the UK.  While in the short term the Government’s focus appears to be on aiding recovery and not on raising additional tax from individuals, proposals for reform will not be going away and it is therefore as important as ever to take advantage of existing reliefs, while they remain available.

If you would like to speak to a Solicitor about your own estate planning, please contact a member of Stronachs’ Private Client team.