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A few weeks ago all the indications from the Treasury suggested that the Chancellor of the Exchequer would have little or nothing to say about tax on 23rd March. However the Chancellor himself turned this around, making it clear that he wants to be remembered as a tax-cutting Chancellor.
But the impact on the economy of the Ukraine conflict has severely limited Mr Sunak’s headroom and therefore his ambitions. Nevertheless there were some notable announcements. A rise in the primary NIC threshold of nearly £3000 to be introduced in July 2022 was more than predicted. The temporary cut in fuel duty was hardly a surprise but the increase in NIC employment allowance from £4,000 to £5,000 was certainly very welcome. Perhaps the VAT reduction on energy-saving materials was a rabbit out of the hat - but then every Chancellor likes to release one of these at some point in a Financial Statement.
Eyes glistened and ears pricked up when it came to the “tax plan”. Now you’re talking! Capital gains tax reform? A stamp duty overhaul? Major changes to the structure of corporation tax and possibly inheritance tax? No - it was a very thin document both physically and in substance. All these other taxes will remain as they stand for a little longer. The plan is all about “capital, people, ideas” but there is just not the headroom or the resource for major changes. So we had to be happy with a 1% reduction in the basic rate, hopefully to be introduced in 2024/25, in time for the next general election.
On we go…..!
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