Budget Update – “The Prosecco Promise”

Chancellor, Rishi Sunak, was in upbeat mood as he delivered his Budget speech earlier this afternoon. Buoyed by optimistic OBR economic forecasts for the next 5 years, he reeled off a series of spending rounds on health, childcare, education, innovation and hospitality.

At the time of writing, without press releases being available, what was most notable from a taxation perspective was his complete silence on Capital Gains Tax and Inheritance Tax, both of which had been rumoured to be the key target for tax reform. Therefore, it appears the Chancellor is banking on economic growth to allow his to pay for the various giveaways. The biggest taxation announcements were:

• Costs eligible for R&D have been extended to include cloud computing and data costs
• The Annual Investment Allowance limit of £1m of qualifying expenditure has been extended to 31 March 2023
• Amendments to “simplify” and improve air passenger tax, tonnage tax announced
• 50% business rates relief for retail, leisure and hospitality businesses
• No changes announced to the current capital gains tax and inheritance tax regimes
• Corporation tax rate rise to 25% confirmed as being implemented from 1 April 2023
• The NIC 1.25% rate increase for 2022/23, the new Health and Social Care Levy announced a month ago, was reiterated as it will fund future healthcare investment
• Cut in the taper rate for Universal Credit
• Changes to alcohol duties

Head of EQ Taxation, David Morrison, commented,

“This Budget was perhaps most notable for what was not said. No changes in capital taxes nor significant pension reform are to be welcomed by business owners but we remain on high alert for such changes to be introduced later in the Parliament. Any simplification to old fashioned taxes are to be welcomed, and are perhaps cause to uncork a bottle of Prosecco, once duty cuts are implemented.”

We will issue our Budget Summary that will include all the main announcements tomorrow and will follow that with some in-depth articles on what those changes will mean for you and your business.

If you would like to discuss how the Budget will affect you or your business, please get in touch with one of our team by calling one of our offices or emailing taxation@eqaccountants.co.uk.