Rishi Sunak will be laying out his Autumn Budget plans on Wednesday 27th October 2021. The Autumn Budget doesn’t usually attract massive attention, however due to the economic impact of COVID-19 as well as the major supply chain issues caused by Brexit, there will be an intense focus on the next steps taken from the Treasury.
Government Spending Review Results
Every three years, the government outlines the outcome of a spending review that explains the UK government departments’ resource and capital budgets for 2022-23 to 2024-25, as well as the devolved administrations’ block grants for the same period.
This is where concrete figures are released relating to investment in public services such as the NHS, social care, the criminal justice system, housing, and education. Whilst the government spending review isn’t completely binary, it does provide a significant indicator as to where the government will be looking to spend heavily on over the next few years. With government borrowing at a record high due to the pandemic and multiple lockdowns, this spending review will probably cause some of the biggest headlines from the Autumn 2021 Budget.
Stealth Tax Changes
The Chancellor has already admitted that the Autumn Budget will be a ‘technical budget’ meaning the importance is in the detail. There is a strong chance that this will transpire to an influx of relatively small changes to the taxing system which will offer better long-term benefits to the Treasury rather than the immediate short term.
There has already been confirmation of one stealth tax change already, in the form of a reform to basis periods for sole traders and partnerships set for April 2024. This enables business profits to be calculated for the tax year rather than the accounting year, providing an aided impetus for sole traders and freelancers to transition across to the Making Tax Digital quarterly reporting scheme.
Capital Gains Tax Amendments
With the NIC increase, the government are remaining very tight lipped regarding any further main tax rises. What is likely to happen though is for a reduction in Capital Gains Tax reliefs. CGT is a tax on the profit of a sold item which has increased in value, with only the actual gain of the profit being taxed, not the whole sum of money received from the sale. In November 2020, the Office of Tax Simplification (OTS) advised that CGT should be in line with income tax, suggesting the idea that the CGT rate rise to 20% for basic rate taxpayers and 40% for higher rate taxpayers.
In the March 2021 budget, the Chancellor announced a freezing of the threshold at which Capital Gains tax is paid. This was £12,750 and was set to be in place until 2026. Many are predicting that this is likely to be revisited, albeit amended slightly to claw back some kind of revenue for the Treasury.