Wednesday - Budget Day - Watch Out!
The country in double-quick order, has increased its national debt to more than its entire gross income of the country, pushed thousands of businesses into failure and turned cities into virtual ghost towns. Unfortunately, for us mere mortals it is not going to stop there. This is all going to have to be paid for and as we are all well aware, the way this is done, is through further taxation of businesses and us as individuals. I thought it would be an appropriate time to talk about what could happen in the months and years ahead. The governments first opportunity to start trying to balance the books, will come with this delayed 2020 budget, please remember as you read, these are my thoughts/opinions as I do not have a secret information source in the treasury or a crystal ball. The Budget The annual announcement expected during November, is now only a few weeks away. These are some of the areas I think we could see change: Capital Gains Tax (CGT) Changes to the rate/band could be in the wind, it would seem like one of those taxes that does not affect most, but could bring in a sizable amount of additional tax. Will the government be brave enough to talk about applying a new rate of CGT on the sale of your main home? Inheritance Tax Mainly seen as a tax on the very rich, but can affect far more people than everyone realises, even just freezing the starting point of IHT will have an impact. However, lowering the starting band or introducing some clever new structure within the current system, could see more tax paid in this area. Savings Allowance Has been reduced over the years and could now be in danger of being abolished altogether. Income Tax Could we see for the first time in many years, an increase in the basic rate of tax? If not we will definitely see a freezing of rates, so more people are pulled into higher tax bands, therefore paying more tax. New Taxes Now this one is even more contentious, but it is just possible that taxes, such as internet sales tax or long-term care tax, could be on the cards. In the minds of many, these will not be seen as a direct tax affecting themselves, but they will definitely increase prices to all of us through increase retail/service delivery costs. National Insurance Always thought to be the tax we pay to fund the NHS, but reality is, it is just another tax. This one could affect the self-employed more. Other areas the chancellor could consider are Pensions, VAT, IPT, etc. Tax Investigations The Government can increase tax revenue by focusing more on recovering tax, they think should have been paid but has not. To do this, they use their tax investigation powers. Now there are two aspects to this, Tax Avoidance, which is morally, legally, ethical to do and then there is Tax Evasion, which is very illegal, immoral and unethical to do. Unfortunately, even though most of us will never entertain or commit Tax Evasion, HMRC still opens investigations against perfectly law abiding citizens (that’s what they call us), costing £000’s of pounds to defend against them, which could result in finding the person had not owed anymore tax than before. If you think in the 2018/19 period, HMRC collected an additional £4 billion from individual taxpayers through this mechanism, you can easily see this is both a lucrative and easy area for them to target, especially even more so now. Important Note: The chancellor may just talk about these things changing later this year/in future years but not actually deploy them immediately, this way by the time they take effect you will have forgotten about them.