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With both the global and UK economies coming under pressure from the rising cost of living crisis, which has only been exacerbated by Russia’s invasion of Ukraine, all eyes will be on the chancellor when he makes his Spring Statement speech on 23 March 2022. Here, Christy Wilson, tax associate at Katten UK predicts what we may see as Rishi Sunak sets out his vision for the Uk economy over the next few months.
1. Some forms of pandemic support will be phased out (for example, the £6000 grant extended to businesses impacted by the Omicron variant in the hospitality and leisure sectors in England), so it seems unlikely that the chancellor would make more business tax increases than is already in place
2. The Treasury launched a consultation on 25 February asking for input in relation to the introduction of an online sales tax, the consultation is open until May therefore it is unlikely that there will be any material developments regarding online sales tax in the Spring Statement
3. With increases in NIC and tax on dividends, it seems unlikely that the Government would make any announcements around employment taxes of this type
4. There is pressure on the chancellor to pause the planned increase of NIC rates due to the recent spike in the cost of living – although the PM and the Chancellor have said that the NIC rise will continue as planned
5. No changes to capital gains taxes are expected as the Government only recently (in December 2021) ignored proposals by the Office of Tax Simplification to raise capital gains tax rates to align them with income taxes
6. The reduced 12.5% VAT for the hospitality and leisure sectors which was due to end 31 March 2022 could be extended due to the recent Omicron variant induced restrictions which largely affected businesses within these sectors
7. Reform of the use of commercial SDLT rates for mixed use properties and/or changes to the scope of multiple dwelling relief (MDR) (i.e. to include at least 3 dwellings)
8. Introduction of legislation/regulations in relation to minimum level of tax at 15% – off the back of OECD Pillar 2 government consultation
9. Possible legislation following the consultation on redomiciliation of companies
10. Due to the spiralling costs of living, there is speculation as to whether the chancellor will announce measures that will help individuals with these increasing living costs e.g. tax rebates
11. The Treasury recently published a summary of responses in relation to the review of the UK funds regime, therefore it is possible that there may be changes to the UK funds landscape
12. There is also talk of a windfall tax being introduced in the energy sector – although this seems unlikely given that the Government very recently introduced the Public Interest Business Protection Tax which is aimed at the energy sector
13. A reduction in fuel duty due to increased costs of fuel
