What Tax Changes Will The Chancellor Announce On Budget Day? RSM UK

RSM held a Budget briefing this week and here George Bull, Senior Tax Partner at the audit, tax and consulting firm, sums considers what the Chancellor might do next Wednesday.

I cannot recall a time when the economic and political backdrop to a Budget was so complex, with so much at stake. Having demonstrated his abilities during the pandemic, the Chancellor now has to simultaneously achieve four fiscal objectives.

First, in an atmosphere where many doubt that the Government has an economic plan, the Chancellor must demonstrate exactly how he proposes to bring the public finances under control. Only a few weeks ago, it seemed that economic recovery might give the Chancellor more latitude than might have been expected. That is now open to question. What role will taxation play in this?

Next, with concerns that the proposed health and social care levy may prove to be inadequate even before it comes into force, he has to reassure his own party, the Opposition and voters that there are no significant gaps or, if there are, clarify how they will be filled. Will the levy be increased? Or will council tax have to rise?

Third, with the climate emergency upon us and COP26 in Glasgow just around the corner, the country needs to hear how the government will facilitate efforts to reduce the UK’s CO2 emissions. Recent announcements have been criticised as being long on rhetoric, short on substance. Will people be prepared to pay more tax to meet the costs of transition to a lower-carbon economy? Will there be a roadmap of planned government actions, on which businesses can rely and so play their part? And with petrol and diesel cars to be phased out, how will the Chancellor fill the gap left by declining receipts from fuel duty?

Finally, can the Chancellor create or stimulate substantial change in each of those three areas without destroying his capacity to announce the mooted pre-election tax cuts in 2023 or 2024?