Following the Chancellor’s Budget announcement earlier this month, HM Treasury will reveal documentation on future tax policies on 23rd March.
HM Treasury are expected to announce information regarding technical administration of the tax system, such as moving online. However, Rishi Sunak could potentially announce a number of possible tax changes.
In the Budget, Chancellor Rishi Sunak announced a ‘stealth tax’ freeze on protections against income, capital gains and inheritance duties, worth £20bn. He also announced an increase in the corporation tax rate from 19% to 25% by 2023.
Although numerous measures were announced at the Budget, the Chancellor still has billions to raise, to pay off the £400bn deficit.
Online sales tax
The government is expected to address a number of policy proposals for reforming and even replacing business rates. A new 2% online sales tax has been proposed, which would raise £1.5bn a year.
The idea behind an online sales tax is to ease the pressure on high street businesses, who have undoubtably struggled throughout the pandemic. The revenue raised would also help to cover the £10bn cost of the business rates holiday.
Changes to inheritance tax
The Treasury wants to ensure that the tax system is as simple as possible, especially during difficult times. Changes to the death tax regime would save hundreds of thousands of bereaved families from filling out tax forms every year.
Reports have suggested the government could consider a new ‘pay-as-you-go’ digital tax system.
The digital tax system would reportedly see taxpayers allocated a digital tax account which banks, workplaces and pension providers would automatically update. Freelancers, investors and landlords would pay throughout the year rather than on set deadlines.
There has been speculation surrounding self-employed workers being forced to pay more tax, if the Chancellor decides to review the lower rates of National Insurance and bring the rates in line with that of employees.
Bigger taxes on investment profits
One change that the Chancellor could announce for implementation in April 2022, is the reform of the capital gains tax system.
In a proposed draft it is suggested that the main rates should increase however, it is unclear what the rates should increase to. Another suggestion was to decrease the £12,300 personal allowance, which would raise £14bn a year.