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Home / News and Insights / Insights / The Autumn Budget

Private wealth advisors and their clients will be raising a glass of (reduced duty and much cheaper) English sparkling wine to the lack of Budget announcements relating to capital gains tax and inheritance tax. Apart from an extension of the deadline for reporting and paying CGT on property transactions from 30 to 60 days-a welcome practical move-this was the budget dog which didn’t bark, despite fears of rate increases and withdrawal of reliefs in the run up to the spending review. This is not really surprising; neither tax raises Covid-hole filling amounts of revenue and now is not the time to discourage entrepreneurs and other investors in the economy by making the UK a less attractive place to invest and do business. That is not to say that reform is off the agenda and indeed there are good arguments that reform is needed. The Office for Tax Simplification (OTS) have produced major reports on both CGT and inheritance tax over the last couple of years and have made proposals for a radical rethink on what the taxes are for and how they should operate. If the government does decide to reform these taxes one hopes this will be done through a wide ranging consultation process to ensure that the new regime is properly thought through and fit for purpose. Any changes need to be business friendly and encourage entrepreneurial activity.

The Chancellor had, of course, already announced an increase in dividend tax rates of 1.25% on each band. So from 6 April 2022, the new ordinary rate, upper rate and additional rate will be 7.5%, 32.5% and 38.1% respectively. Trusts will pay the highest rate of 38.1% on UK dividends.

The previously announced 1.25% increase in National Insurance Contributions is expected to raise £36 billion over the next three years, £12 billion a year. This is more than the 2020/21 capital gains tax take of approximately £10.6 billion, illustrating again that the way to raise revenue is through income tax and NICs (and VAT, though the Chancellor hasn’t done that this time).

Whilst there were no other overt personal tax rises, the freezing of allowances over a range of taxes which was announced in the March budget will also raise billions through the effects of fiscal drag.

Whether this is a temporary reprieve on the capital tax front remains to be seen. Watch this space!

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