Chancellor Rishi Sunak is set to deliver the Spring Statement on 23rd March, providing an update on the overall position of the economy. Whilst major tax and spending changes are generally saved for the Autumn Budget, the current soaring costs of living, including escalating fuel and energy prices, along with the ever-changing political climate around the world, could see pressure to put measures in place to reduce these impacts.
With the update just over a week away, we asked some of our experts for their thoughts and predictions…
Steve Bailey, Tax Manager
First up is Tax Manager, Steve Bailey, “I’m not expecting much from the update as it is very much a statement, an opportunity to provide an update on the overall health of the economy. The update is more likely to outline potential consultations rather than any major tax changes, with possible tweaking of previous announcements.”
Steve added “I see the Spring Statement to be very much a balancing act with the Chancellor, Rishi Sunak, under pressure to address potential cost of living issues, but at the same time seeking post-pandemic economic recovery.
“If I were to look in to my crystal ball, I would say that although there has been plenty of opposition to the proposed National Insurance Contributions (NIC) increase from April, it isn’t really enough to sway the decision. My view is that the increase will still go ahead as planned.
“Also, although changes to fuel duty could help with soaring costs, due to the Government’s commitment to tackle climate change, a fuel duty freeze could be a happy medium.”
Paula Abbott – Tax Director
With years of experience predicting the future of tax, we caught up with our Manchester Tax Director, Paula Abbott, who said, “I don’t think Rishi will do very much in this budget as there is already the NIC increase of 1.25% and the rate increase on dividends of 1.25%.
“However, if I had to predict anything it would be:
- Freeze fuel duties because of the hike in prices.
- VAT left at 12.5% for hospitality for the time being, instead of returning to 20% in April.
- A possible removal of the tax-free uplift of assets to market value on death for Capital Gains Tax purposes. Although, this may be one for the budget rather than the spring statement”
Mark Morris, Head of Corporate Tax
Last but certainly not least with their predictions is Mark Morris, Head of Corporate Tax at our Stoke HQ. Mark said “I’m not expecting much from the Spring Statement, but there’s definitely pressure to soften the impact of rising bills, plus increasing spend on both green strategies and military budgets. Doing this at the same time as supporting economic recovery is not an easy task.
“If anything new is announced, given the spiralling prices at the pumps, I think it could be a potential fuel duty freeze or even a cut. There are also calls for the tax-free approved mileage rates to be increased as these have not changed since April 2012. However, given that the advisory fuel rates for employees using a company car were not increased on 1 March 2022, it appears unlikely that the Government will do so.”
That’s what our experts think, so it will be interesting to see if any of the predictions for the Spring Statement are accurate. Watch this space Wednesday for our early round-up, followed by our detailed report on Thursday.
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