Following UK Chancellor Rishi Sunak’s Autumn Budget, we hear all the latest reactions from the profession
Crowe Head of Tax Jane Mackay said:
“The ‘economic scarring’ from COVID may not be as bad as predicted, but we’re not out of the woods yet, and there’s a huge COVID bill still to deal with. The Budget statement hasn’t really given us clarity on who will pay that bill. The tax increases that were announced before the Budget, including corporation tax rising to 25%, and the NHS and social care levy additional NICs of 1.25%, might suggest the strategy will spread the burden as widely as possible, rather than to make the structural changes to our tax system that may be what is really needed.”
“It’s great news that unemployment is expected to peak at 5.2% but this doesn’t reflect the pressure businesses feel due to the increase cost of NIC by 1.25% and the shortage of workers in certain sectors.”
HW Fisher Head of Tax Jamie Morrison comments:
“The lack of changes announced today for British businesses actually provides them with the certainty and stability they have been craving over the last 18 months. The hidden tax changes are still there though, with the government set to benefit from the additional tax increases that higher wages always bring.
“The approach in the lead up we have seen with slowly dropping business bombshells including the amends to NIC just last week means a lot of the most impactful announcements had already been made.”
Alvarez & Marsal Head of Tax Marvin Rust commented: “Businesses were expecting the chancellor to help those sectors hit hardest by the pandemic. Business rate relief will be welcomed across the retail, hotel and leisure sectors. However, calls to extend the period where the lower VAT rate on the food, accommodation and leisure sectors have disappointingly gone ignored.”
“As the chancellor pointed out, economists are now forecasting GDP growth in 2024 and beyond to be around 1%, well below the average rate the economy is used to. Despite the dim growth predictions, the chancellor does not yet appear to have come up with a plan to support businesses beyond this period and ‘turbo-charge’ growth for the long term. The announcement on encouraging investment in Britain’s most innovative sectors is welcome, but so far not enough has been done to boost the UK’s broader productivity.
“The chancellor’s statements on post-Brexit tax reforms to research and development credits, alcohol duty, tonnage and air passenger duty are promising but he should have gone further introducing more of these changes now rather than waiting to April 2023.”
Chris Sanger, EY’s Head of Tax Policy, comments on the Annual Investment Allowance (AIA):
“In a Budget that was light on tax incentives for capital investment, there was some welcome news in the form of a further temporary increase in the limit of the annual investment allowance (AIA) from £200,000 to £1,000,000 for qualifying expenditure on plant and machinery incurred during the period from 1 January 2022 to 31 March 2023. The AIA, a 100% capital allowance for qualifying expenditure on plant and machinery up to a specified annual limit, has been a feature of the UK legislation since 2016. Its predecessors were nicknamed the yo-yo tax relief, as Chancellors were renowned for increasing and decreasing it to stimulate investment.
“Today the Chancellor has extended the period of the “temporary” relief through to the start of the new 25% rate of corporation tax. Given that much of the expenditure in this period may also be covered by the “super-deduction” announced in the Spring, the cost of the extension is far less than in normal times. Nevertheless, it will be valuable to those purchasing second hand equipment, something excluded from the Chancellor’s incentive in the Spring.”