Is this a lucky Chancellor? A faster than expected growth economy, plus inflation, has resulted in more taxes being collected and more money available to be spent. In relation to businesses, we see, and welcome, business rates being cut in hard-hit sectors like leisure and hospitality, and the R&D tax reduction remaining in place. Additionally, and highly relevant to UK M&A activity, the Chancellor did not increase Capital Gains Tax (CGT) rates as had been anticipated following the Office of Tax Simplification recommendations and the need to raise revenue. Perhaps the Corporation Tax rise to 25% in April 2022 will suffice and let’s face it, that’s a big hike coming.
A CGT rate increase or at least reducing reliefs cannot be ruled out in the Spring, but some believe it is less likely today with the need to encourage business investment and support entrepreneurial activity to drive the UK’s recovery. It appears we may be off the emergency patient list for now with one of the fastest-growing economies in Europe and the expectation to achieve pre-pandemic levels by just 2022 – a considerably faster recovery than expected.
We will leave Rishi Sunak with the last word – he says the Government “should have limits” and as a result, his goal is to reduce taxes by the end of this Parliament: “I want taxes to be going down not up. I want this to be a society that rewards energy, ingenuity and inventiveness. A society that rewards work.”
On reflection, we feel the need to have the last word – this Government does sound pro-business after all.