Prepare for likelihood of taxes for businesses and individuals rising

Last Tuesday heralded the first Tax Policy and Consultations Day from the UK Government.

Rishi Sunak released a number of consultation documents relating to long-term changes in the government’s tax policy.

Often, proposed changes are included in the Budget but this means they often don’t get the focus or attention they need or deserve.

It is hoped that a day distinct from the Budget will allow better dialogue and feedback on changes.

However, many of the announcements were quite technical or only included to start the conversation around some proposed changes.

Nothing was covered about much talked-about proposals to align capital gains tax with income tax rates, although this might be covered in the budget later in the year.

It is clear the chancellor is keen to try to use technology to streamline as many tax processes as possible to increase transparency.

He has published a call for evidence on the frequency and timing of tax payments. This focuses on income tax and national insurance outside regular payment regimes such as PAYE.

One of the key changes announced was a reduction of “red tape” surrounding inheritance tax, which is welcome news and will reduce the burden for those dealing with this tax during an already difficult time.

It was also announced that we should expect a number of technical updates in areas where the pension system does not work.

In addition, HMRC will be given greater powers to tackle promoters of tax avoidance and have set out a package of measures which could be used to restrict the promoters of such schemes, particularly their ability to close these businesses down and to disqualify their directors. There were also a number of technical updates on VAT, including that there will be no changes made to the VAT grouping rules.

The government also plans to set out some ways to simplify the existing process for partial exemption and the capital goods scheme as a “first step” towards addressing concerns about these regimes.

Also, evidence will shortly be published on the exemption from VAT for land and property, with the aim of exploring options for making the exemption simpler and clearer.

What was not announced was how the black hole left by Covid19 government support will be repaid.

I think we are likely to see a raft of changes announced in the autumn with increased taxes for businesses and individuals. We should brace ourselves for that.

Kimberley Thomson.