Chris Sanger, EY’s Head of Tax Policy, comments on the Chancellor’s Budget:
“The Chancellor today set out a Budget of two halves – three years of support, followed by three years (and more) of pain. The first three years has focused over £70bn on delivering through COVID, with extensions to the Furlough Scheme, business rates relief and reduced VAT rates, together with an extension and expansion of the Self-Employed Income Support Scheme.
“Offsetting this spending, to the tune of almost the same amount, has been the increase in the corporation tax rate from April 2023 and the freezing of many thresholds from April 2022, making time the Chancellor’s friend in his aim of replenishing the Government’s coffers.
“All in all, the Chancellor delivered on his promises of helping today but at the cost of tomorrow. In order to keep costs low, the Chancellor has included a number of transitions, with VAT rates rising in two steps, and similarly with Stamp Duty Land Tax. This seems to show that the Chancellor is more focused on support than on simplification, perhaps one reason why he chose not to act today in response to some of the measures suggested by the Office of Tax Simplification on areas such as Capital Gains Tax.
“As for the future, there is still more to come, with the new “Consultation Day” coming in under three weeks in the snappily titled Command Paper, ‘Tax policies and consultations (Spring 2021)’. We may yet see more tax rises signalled in this document as today’s £30bn per annum by 2025 falls short of the figure that the Chancellor was thought to be targeting.
“So, all in all, today may only be a down payment from the Chancellor – both in terms of extra support if COVID-19 extends the path out of lockdown, and in terms of tax rises, as the Chancellor reveals more of his plans for funding the future deficit.”