The Spring Statement is just weeks away, with The Chancellor, Jeremy Hunt set to deliver his latest announcements on the 6th March.
As the last budget before a general election later this year, and against an ongoing backdrop of high inflation and a recession, Jeremy Hunt has faced growing pressure to deliver on tax cuts. But what do our experts think?
We’ve asked some of our tax team to weigh in and share their thoughts and predictions.
Here’s what they predict…
Big changes for families with children is a possible strong outcome, as the High-Income Child Benefit Charge (HICBC), has scored a hattrick of predictions, with Michael Burgess, Tax Director, strongly supported by Christine Wise, Tax Manager, and Matt Verling, Tax Manager, all believe that it will either be abolished, or there will be substantial changes, including significantly increasing the income threshold or changing the criteria as to how the charge is applied.
Beth Hickman, Tax Senior, predicts The Child Benefit Tax Charge (CHB) repayment threshold could be increased from £50k in line with inflation.
What’s next for Inheritance Tax (IHT)?
The Autumn Budget was a surprise to many with no changes to IHT, which is why a few of the team believe the speculated changes from November, will now be announced in March.
Steve Bailey, Senior Tax Manager, thinks that with an election looming, this budget will be viewed as the ideal time for the long mooted IHT reforms to finally come to fruition, with an announcement of an increase in the Nil Rate Band (NRB), or changes to certain reliefs -plausible options as pre-Election attempts to woo certain voter categories.
Whilst Josh Draycott, Tax Manager is sticking with changes to the IHT system, he also agrees with Steve, and thinks there will be a slight U-turn, again with a potential increase in the NRB and possible changes to improve the availability of reliefs.
Shannon Steele, Tax Manager, predicts that there may be a possibility of a stepped inheritance tax rate, depending on the estate size to fall in line with the income tax regime.
With the previous buzz around a reduction and even scrapping Inheritance Tax which could also be fulfilled, careful consideration would have to be given to a measure which would please older voters but could also be perceived as rewarding the wealthy during a cost-of-living crisis, says Mark Morris, Senior Tax Manager.
What else could be announced?
This is one of Rishi Sunak’s last chances to overcome a substantial deficit in the polls, so Mark also expects there to be some sort of ‘feel good’ announcement for the benefit of the voters. Therefore, a potential cut in the basic rate of income tax of 1% or possibly 2%, following hot on the heels of the reduction to the rate of National Insurance in January, which would seem the ideal course of action provided the figures add up.
Providing a positive prediction, Keely Coleman, Tax Manager, anticipates that there will be an increase in the Basic Rate Band (BRB), which refers to the band of income in excess of the personal allowance available to an individual which is taxable at a basic rate. This would be a welcomed benefit to higher earners.
Whereas both George Lovell, Director, DTE Business Advisers, and Kelly Yang, Tax Manager, believe there will be an increase in the income tax personal allowance from £12,570 to £13,500.
So, that’s what our tax team think! We’ll now be sitting patiently waiting to see if any of our expert’s predictions were correct. We’ll be keeping a close eye on the announcement on the 6th March and will be ready for our early-round up later that day, followed by a detailed report on Thursday 7 March.
