Apparently there is a £22bn black hole in the public finances – and what could the new
Chancellor do to plug it? Well here is a list of possible changes.
Obviously, this is just a list of potential changes but it will be interesting to see how many of these are implemented. It’s also interesting to consider how the Chancellor’s decisions might be influenced by which tax changes are likely to be more or less popular with the public.
So what would be the effect of the various smaller tax changes she could make?
| What could be changed | £bn impact |
| End pension tax-free lump sums | 5.50 |
| Cap tax relief on ISAs | 5.00 |
| Reduce the VAT threshold | 3.00 |
| Limit pension contribution tax relief | 3.00 |
| Limit IHT tax reliefs | 2.00 |
| Abolish business asset relief | 1.50 |
| Tax gambling winnings | 1.00 |
| Increase council tax | 1.00 |
| Increase stamp duty | 1.00 |
| Increase capital gains tax | 1.00 |
| Increase inheritance tax on trusts | 0.50 |
| Increase vehicle duty | 0.20 |
| Increase the ATED tax | 0.20 |
| Raise income tax rate to 50% | 0.10 |
| Increase in government tax take | 24.91 |
What do you think? Rank our poll and then we can see how close we get to the budget
Changes.
NB, obviously this is based on estimates and credit goes to the independent think tank Tax
Policy Associates for the data.
So how could these tax changes affect your business?
With a £22bn hole burning in the government’s pockets, the new budget could have businesses bracing for impact as the Chancellor considers ‘what taxes might be raised in the budget?’. From subtle tweaks to major overhauls, here’s a look at how some of these potential changes could turn your business upside down.
- Wave goodbye to business asset relief (£1.5bn impact)
We might be saying farewell to Business Asset Relief, that handy tax break that makes selling and passing on your business a bit less painful. Without it, small business owners and entrepreneurs might face a bigger tax bill, making them think twice about selling up, retiring, or reinvesting in new ventures. This could slow down business growth and put a damper on entrepreneurial spirit – not exactly the jolt the economy needs.
- Lower VAT threshold (£3bn impact)
I imagine lowering the VAT threshold will be like pulling more small businesses into the tax net, and no doubt, kicking and screaming! Suddenly, businesses that were flying under the VAT radar will have to register, which means more paperwork and maybe even a cheeky price hike to cover the new tax bill. For some, it might be a push to stay small rather than leap to the next level. On the flip side, however, it might actually be a boost to the small business economy as lots of studies have shown a high registration threshold stunts small business growth.
- Pension contribution tax relief takes a hit (£3bn impact)
Got a cushy pension plan for your employees? Well, that might be about to get a bit pricier. Limiting pension tax relief could mean companies have to cough up more to keep those attractive benefits packages rolling or rethink how they reward their teams altogether. If businesses aren’t careful, the extra costs could nibble away at the bottom line. It will also hit higher rate and additional rate earners if they only get basic rate tax relief!
- Rise in stamp duty (£1bn impact)
If your business is buying or selling property, an increase in stamp duty might feel like a smack to the wallet. With every deal costing more, property investors, developers, and companies needing new digs might just decide to stick with what they’ve got.
- Vehicle duty on the rise (£0.2bn impact)
Businesses with company cars, vans, or entire fleets are likely to feel the pinch if vehicle duty gets bumped up. From delivery drivers to builders, those higher taxes on transport will mean higher costs, which could force businesses to rethink routes, reduce services, or reluctantly pass the cost on to customers.
Let’s talk about the impact on your business
As the Chancellor grapples with a £22bn deficit, the question of ‘what taxes might be raised in the budget?’ looms large for everyone, especially businesses. While the specifics are still up in the air, it’s clear that potential tax changes could have significant impacts. Now more than ever, stay informed, prepare for possible shifts and stay proactive. After all, when it comes to taxes, it’s always better to be prepared than surprised.
Curious about how these potential tax changes might affect your business? Get in touch at [email protected] to discuss how to prepare for the next budget.
