Chancellor of the Exchequer, Rishi Sunak, was due to deliver the next Budget in autumn. However, the Treasury have recently announced that the Autumn Budget will be scrapped this year because of the coronavirus pandemic. After borrowing and spending billions on the COVID-19 response so far, the Chancellor was reportedly considering different ways for this money to be clawed back. According to reports, a few of the areas that were going to be looked at were raising capital gains tax and corporation tax.
Mr Sunak has previously said some taxes will need to rise over the medium term. The reported tax increases under consideration included a sharp jump in corporation tax – reports suggested increasing corporation tax from 19% to 24% to increase revenue. Additionally, it was also suggested that capital gains tax might also be paid at the same rate as income tax to increase revenue.
The Chancellor has however insisted that a “horror show of tax rises” were not on the horizon. Mr Sunak said that while the Government “will need to do some difficult things” in an effort to “overcome short-term challenges”, this did not mean “a horror show of tax rises with no end in sight.” Mr Sunak also said that ministers will need to be honest with the public about the challenges ahead and show them how the Government plans to “correct our public finances and give our country the dynamic, low-tax economy we all want to see.”
Despite there being no Autumn Budget this year, there will be a spending review to set out the overall shape of government spending. Typically, the government outlines the state of the country’s finances in the Budget and, crucially, proposes tax changes. But any such decisions will now be put on hold until next year. Instead, the government will reveal how much each department is allowed to spend.
This could mean that the proposed tax changes are now just delayed. It is worthwhile taking these potential proposed changes into account during this period of ongoing uncertainty.
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