Claire Lea
Prime Accountants Group’s Claire Lea and Steve Harcourt say the real detail on tax changes is to come in two weeks’ time.
A leading Midlands accountancy firm says the real detail on the government’s first Covid-19 recovery budget will not be known for another two weeks, when the full picture of tax changes is outlined.
Chancellor of the Exchequer Rishi Sunak delivered his second budget in the House of Commons last Wednesday, when he outlined the ongoing Covid-19 pandemic support being offered to businesses and individuals, while also giving the first details on how the money is going to be paid back.
Giving their reaction to the announcement, Claire Lea and Steve Harcourt who are directors at Prime Accountants Group, which has offices in Solihull, Birmingham and Coventry, said that while much of the detail had been trailed in the media ahead of the budget, the true extent of changes to tax won’t be known until the Treasury’s ‘tax day’ on March 23.
The consultations published on the day are expected to influence the government’s 10-year tax strategy and, with it, much of the key detail about how the pandemic borrowing will be paid back.
Some of the key spending outlined in the budget included the extension of the furlough scheme until the end of September; a continued cut to VAT for hospitality businesses and a £5 billion grant fund for High Street shops and hospitality firms.
But Mr Sunak also set out how he intends to start paying back the money borrowed to support the country during coronavirus, a figure which already stands at £355 billion – the highest in peacetime.
The personal tax threshold will be frozen for 12 months, while corporation tax will rise from 19 per cent to 25 per cent in 2023 for those companies making profits of £250,000 and above.
Reflecting on the budget, Claire said: “We expected a lot of the things we heard and we are expecting a lot more to come further down the line.
“It is different to other budgets. The documentation that follows usually comes on budget day and that doesn’t happen this year. We’re having what is being badged as ‘tax day’ in two weeks’ time when further details will be released.
“In terms of income tax, a lot of our clients are worried about the chancellor raising capital gains tax to the same 45 per cent level as the highest income tax rates.
“We have already seen the thresholds on income tax being frozen, which has the effect of bringing more people into tax without having to raise anything.
“There has also been talk for a long time about reforms to inheritance tax and pensions tax. We might see more detail on that in two weeks and there will potentially be another budget in the autumn.”
Steve added: “The continued support is critical in this budget. The government has to be very careful what it does with taxation.
“Our clients aren’t sector-specific, so with the extension to furlough, we are seeing businesses caught out in a roundabout way when hospitality and leisure businesses are closed. There is a balancing of the books to pay for this.
“However, 11 million jobs have been supported and it is good to see that continued until the end of September.
“Something else which I’d be keen to see on ‘tax day’ is business rate reform, to help High Street businesses which have really struggled. It has been heavily penalising them over the past four to five years – it isn’t a recent thing. The pandemic has really heightened the need for reform.
“Another policy which will be key is the green incentives, which will hopefully kickstart a green industrial revolution over the next few years. This should really help businesses become carbon neutral over the next 10 to 20 years.”
You can see more of Prime’s reaction to the budget with Claire Lea and Morgan Davies by visiting the Made in Group TV YouTube channel at https://youtu.be/vAqVACvuynA.
For more information about Prime Accountants Group, visit www.primeaccountants.co.uk or search for Prime Accountants Group on LinkedIn.
