What does this year’s Autumn Statement hold in store? It’s been a turbulent 12 months, that’s for sure. As ever, it’s notoriously difficult to get Budget predictions right. But these are some of the topics we think the Chancellor may address on October 27.
UK economy rebounds
The Covid-19 pandemic caused untold problems. Fortunately, the UK economy rebounded. And stronger than expected. Lately however, growth has slowed. But there’s prospect that it will reach 6.8% in 2021. We don’t know how the energy crisis will impact. For now, the Government has ruled out direct assistance to energy intensive companies. Naturally, this policy may change if the situation worsens.
Suspension of VAT?
The fist of our Budget predictions concerns tax. One option for the Government would be to temporarily suspend VAT on energy payments of 5% or 20%. It would provide some comfort to businesses. In addition, it could help householders cope with soaring domestic energy bills.
The current crisis demonstrates the energy issue all too well. We simply must reduce our reliance on fossil fuels. And invest in renewables. Then, we can capitalise on green sources of energy. Of course, there are no quick fixes. The Green Homes Grant closed in April. We wouldn’t be surprised if the Chancellor replaces it. Perhaps a new, enhanced scheme to help homeowners carry out sustainable renovations?
Fixing the social care crisis. It was a Conservative party election pledge. Finally, the Government has set out its plans. Where does this leave the issue of taxation? Businesses and employees will have to pay the health and social care levy on employers’ National Insurance Contributions. Therefore, we don’t expect any additional employment-related tax rises.
The government is committed to creating jobs. It’s a major element in its levelling up plans. The apprenticeship and Kickstart schemes are popular. An extension to the financial enhancement of both schemes is already in place. However, tackling tackle the skills gap is a priority. We think the Budget may contain further incentives.
Capital Gains Tax up?
Gains on the sale of properties and businesses are protected from tax increases. For now. Yet, above inflation house price rises continue. Consequently, we expect an amendment to Capital Gains Tax. Most likely it will take the form of an alignment. The CGT tax rates relating to profits from the sale of non-residential property and businesses could soon reflect personal tax rates.
Pension saving changes
So, the state pension triple lock is no longer sacrosanct. The Government is suspending it. For the time being. Realistically, a reduction in the tax savings from private pension contributions is on the cards.
Are these hot topics? All will be revealed when the Chancellor delivers his statement on October 27.