There was quite a lot to like and a few sighs of relief from those paying attention to the Chancellor’s second Budget.
The sighs of relief would have been around not raising main rates of income tax, national insurance or value added tax – at least for the time being. The announcement that the personal allowance and higher rate band will be frozen till 2026 will bring in small amounts of personal tax and could be a concern for business owners. The main change for businesses was in the rise the rate of corporation tax to 25%. This will not apply to the 70% of family trading companies whose profits do not exceed £50,000. However, for those larger businesses affected, careful planning will need to be carried out to manage profit extraction as this will be more limited in future
In terms of support there was a lot on offer and those with businesses who have suffered losses during the worst economic contraction since the Great Frost of 1709 might be slightly cheered by the prospect that the relief provisions for losses (capped at £2,000,000) incurred in either 2020/21 or 2021/22 will be eligible to be carried back against taxable profits made in the preceding three years.
Much of the Chancellors’ speech was on the theme of rebuilding, levelling up and incentives to invest. Business owners will be pleased to see that Capital Gains Tax and Inheritance Tax, which many predicted would be increased was not, or at least not yet. The tax rises announced will not plug the deficit and one suspects there must be more to come.
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