The key announcements in the Budget on Wednesday 3 March 2021……..
One of George Osborne’s first acts as Chancellor was to establish the Office of Tax Simplification (OTS). That organisation has spent the last five years identifying needless complexity in the tax system and recommending changes to make dealing with tax less taxing. Sadly, whatever the OTS does to reduce complications, the Chancellor seems to replace with more. Few people expected the July Budget to be so full of far reaching measures that over the next few years will significantly change the way tax is calculated.
We were promised, of course, the ‘tax lock’ – a law to prevent the Government putting up the rates of income tax, national insurance and VAT but there are more ways to increase taxes than just putting up the headline rates. A significant reform of the taxation of dividend income next year will affect those who have been able to extract profits from their personal company in a tax-efficient way. The reduction of income tax relief on mortgage interest relief will put up the tax charges for buy-to-let landlords from April 2017. Restricting the tax advantageous of people who are currently classified as ‘foreign domiciled’ is another potential tax-raising measure, but it is not clear whether wealthy international people will pay more tax or will move elsewhere.
As expected, the Chancellor has focused his attention on the welfare budget, hoping to save £12 billion. He said he wanted to move to a ‘higher wage, lower tax, lower welfare economy’. He has announced a higher National Living Wage and higher personal allowances – and has certainly cut welfare. It remains to be seen whether that will generate the economic activity he hopes for.
For more information regarding any of the changes announced in the budget please give us a call. We would be happy to advise you on what it all means for you personally.