Brace for Budget surprises
An increase in tax rates to offset economic support during the pandemic is a real possibility that everyone should prepare for, writes Jill Walker
Before the scheduled autumn 2020 UK Budget, advisers and taxpayers alike were bracing themselves for a hike in the rate of capital gains tax as well as the very real possibility that some reliefs, such as Business Asset Disposal Relief, known previously as Entrepreneurs’ Relief, might be withdrawn altogether.
When the Budget was pushed back to spring 2021 there was an audible sigh of relief – but with a number of recent Budgets containing surprise announcements, it is important to consider any possible changes ahead of Budget Day on 3 March.
Against the backdrop of Covid-19, there is a very real risk that there will be an increase in tax rates to fund the economic support provided by the Treasury during the pandemic.
More uncertainty is not what the economy needs at the moment, and it was hoped that any sweeping changes would be consulted on to allow taxpayers the opportunity to plan if required.
As Budget Day edges closer with no hint of what is to come, taking action to utilise reliefs and rates as they are now may well be beneficial.
So, what are the possible changes? ■ Capital gains tax (CGT) rates are historically low at the moment, ranging from 10 per cent for basic rate taxpayers up to 28 per cent for higher rate taxpayers on the sale of residential property. There are also generous reliefs available, including Business Asset Disposal Relief (BADR), which can reduce the rate of tax from 20 per cent to 10 per cent on up to £1 million of gains.
The Office of Tax Simplification (OTS) recently set out recommended changes to CGT. As well as an increase to the rates to align with income tax rates, the OTS proposed: withdrawing BADR and replacing it with a relief focused on retirement; abolishing Investors’ Relief; removing the uplift in value of assets on death with the recipient instead acquiring the asset at the original base cost of the deceased; reducing the annual CGT exempt amount (currently £12,300) and replacing it with a relief for inflationary gains, and taxing retained earnings in companies at dividend rates rather than CGT on the sale of the shares or when the company is liquidated.
■ Income Tax and National Insurance Contributions (NIC) rates are not expected to increase – the Scottish Government has confirmed that Scottish rates will remain the same, with a slight change in the starter and basic rate thresholds.
But pension reliefs, which have already been heavily restricted in the past few years, could be reduced further, in particular for higher earners. And self-employed individuals may need to brace themselves for an increase to NICS.
The Chancellor has already hinted that the self-employed should pay the same level of contributions as those who are employed. Currently the main rate of NIC for the selfemployed is 9 per cent against 12 per cent for employees. Historically the self-employed have reduced entitlement to some benefits.
■ The corporation tax rate is at an all-time low of 19 per cent and it is estimated for each percentage point increase in the rate, around £3.4 billion would be raised. With average rates across the G20 nations being 27 per cent, the rate could increase and still leave the UK in a highly competitive position.
■ Stamp Duty Land Tax (SDLT) is another candidate for possible changes, with the current holiday scheduled to end on 31 March. The Scottish Government has already confirmed that the equivalent Land and Buildings Transaction Tax (LBTT) holiday in Scotland will end on the same date.
■ The Wealth Tax Commission published its report in December and although not entirely in favour of the introduction of a Wealth Tax, acknowledged that it could raise as much as £260bn. This could be achieved by levying a charge of 1 per cent for five years on individuals with wealth exceeding £500,000.
Given this would be a first in the UK, and the Chancellor has previously publicly dismissed the introduction of such a tax, this option might be less likely to feature in the Budget Day announcements. Jill Walker is a private client director at Anderson Anderson & Brown
John G Henderson, BSC, pioneer of Scottish long distance walking routes and pilgrimages. Born: 17 January 1949 in Edinburgh. Died: 15 February 2021 in Melrose, aged 72.
Love of the outdoors and long walks. A lifelong, deeply held faith. Eldership of the Church of Scotland (he was at one time accepted into the ministry, though after much thought he declined.)
These were key to John G Henderson’s pioneering involvement in long distance walkingandpilgrimageroutes in Scotland.
He was heavily involved in the planning of many walking routes, including the Rob Roy Way, the St Cuthbert’s Way and the Abbey’s way.
He became a director of the Scottish Borders Tourist Board at the same time as setting up his own business providing detailed support for the many visitors from home and abroad who came to enjoy and explore the walks.
In time this activity expanded to include many new pilgrimage routes.
John played a key part in their development and was a Trustee and Treasurer of the Scottish Pilgrims Routes Forum until a few months ago.
These new routes were diverse: Iona to St Andrews, the Three Saints Way, the Whithorn Way, the Deeside Way, the Forth to Farne Way and the St Kentigern Way. He co authored books with Jacquetta Megarry about several of these, encouraging walkers to understand more about the history, geography, flora and fauna of the surroundings.
His work in walking support has introduced countless people to the pleasures of walking in Scotland.
John was educated at Glasgow
Academy, where success in sporting prowess in rugby or cricket, or in academic achievement, particularly with entrance to Oxford or Cambridge Universities, was most highly prized.
These pursuits were not John’s interests, and the school reciprocated with a likewise lack of interest in him.
He left school aged 16 but soon found his feet in Langside Further Education College.
Success there led to an apprenticeship with Albion Motors, and then to higher education at Heriot-watt University, where he gained a BSC in Mechanical Engineering.
During this period John found time to be a Special
Constable with Glasgow – he was their youngest – and Edinburgh Police.
Marriage and a young family soon came along, and proved a constant and enduring lynchpin for the rest of John’s life.
He worked for a time in Oxford at the Cowley car plant, before returning to Scotland to work with Strathclyde Council.
In 1977 he moved with his young family to Melrose to take up a post as Executive Engineer Manager at Exacta Circuits.
This was the start of a lifelong love affair with the Borders of Scotland.
After eight years at Exacta he moved to work with Alphsem in Livingston, but his love of the Borders meant commuting for work was the only option.
In 1988 he was appointed senior Project Engineer to a department of the Scottish Development Agency, moving again after four years to become General Manager of SPEED.
In 2000 John decided to branch out on his own, and this decision was really the start of his second career.
He formed a company, Supply Chain Support, which provided web design and support for many different businesses, alongside planning and guiding long distance walking.
He also ran a separate photography business for a number of years.
It was in these last 20 years that John was to become such a big influence and developer in the Scottish Pilgrimage Routes Forum. Despite so many commitments he was also able to give some of his time to other voluntary activities.
He worked with the Jedburgh Events Forum and Running Festival for ten years; he was a member, then Chairman, of the Melrose Festival and Common Riding Activities; he was a Trustee of Youth Borders, and he was a long standing elder of the church in Melrose as well as their webmaster and Presbytery elder.
Perhaps as a result of this service John was a recipient of “Maundy Money” from Her Majesty the Queen in 2016.
He will be greatly missed by so many different people and organisations, but especially by the family to whom he was devoted.
John leaves his wife of 48 years, Kathleen, their four children and seven grandchildren.
The Borders have lost a true son.