This Budget seems to be mostly about helping working people and businesses recover from the pandemic, and so has focused on spending. The two main costs for people have been rather skated over: these are the 1.25% increase in NICs (to become the Social Care Levy) and the increase in corporation tax to 25%. The NIC increase will reduce everyone’s pay packets a little, and the increase in corporation tax will make everything that little bit more expensive in a couple of years’ time – the Chancellor may well be hoping that by the time they start to have an effect, people will have forgotten about them coming in.
It doesn’t seem to be a huge amount of a tax increase to claw back the costs of the pandemic, so we may well see more coming along over the next few years.
The Business Rates changes should make things a little better for smaller high street retailers, but the more important issue for them is whether an Online Sales Tax will be introduced to shift some of the Business Rates burden away from the high street. A consultation is due to be published shortly, so it seems unlikely that there will be any tax changes in the next year or two.
Similarly, the Universal Credit changes will make life a lot better for working people on lower incomes. However, people who can’t work, and those not in UC, aren’t going to see any of that benefit and may find things getting tougher.
Otherwise, this Budget is about rationalising things and tidying them up. The changes to alcohol duties make a lot of sense, though I suspect that drinkers of weak beer and low-strength wine will be the winners, and those who like cider, strong beer, and spirits might well find themselves paying a fair bit more – CAMRA may not see eye to eye with the WHO on this one. Similarly with air passenger duty: domestic flights will be cheaper but long-haul flights will get hit, especially with the oil price going up
And that really sums up the Budget for me: some sensible tidying up, but to be frank it’s going to be lockdown, petrol prices, inflation, and the supply chain that will have more impact on people over the next year or so. You’ll need to save a lot of 3p’s off your beer if you have to buy petrol at £1.60 a litre.
If you’d like to speak with one of The Martlet Partnership’s tax advisers about the Budget please call 01903 600 555 or email email@example.com.