With inflation looking set to surge beyond 8%, will the Government change their tax plans in an attempt to address the cost of living crisis? To date, Rishi has stood by plans announced in his 2021 Autumn Budget. However, with mounting pressure for action, from calls to scrap the planned NIC increases to cuts to VAT and excise duties on fuel, will his stance change on Wednesday?
In this blog, Sean Glancy, head of VAT at our London office, shares his top predications:
- The temporary VAT hospitality sector reliefs will end and revert to 20% from 1 April 2022. The reliefs have been arguably abused in some instances, with some advisors promoting claims, but the reduction to date does show the ability to flex the VAT rate for government.
- The fuel and power rate subject to 5% VAT could be suspended. This has always been a contentious levy and many feel if should be removed altogether now the UK has left the EC.
- With the Russian invasion of Ukraine having a huge impact on energy prices, will the Chancellor use his Spring Statement to announce a reduce rate to fuel duty? UK fuel duty is currently a flat rate of 57.95p per litre for petrol and diesel. Drivers also face 20 per cent VAT on fuel, with an increase in prices resulting in an increase in the total amount of tax collected. Whilst a reduction would be welcome, it seems unlikely given the climate change lobby. Not to mention the fact the increased tax take is likely something the Treasury is enjoying!
- Many companies are struggling to register for VAT with HMRC, meaning they cannot trade or pay VAT to the Treasury. Investment in HRMC to improve systems to help businesses register and sign up to Making Tax Digital, ensuring the correct amounts are paid at the right time, would be very welcome.
- Almost six years on from the Brexit vote, what has Brexit really meant for the economy? Is there really a Brexit dividend and are we maximising the Brexit dividend? We would love to know.
- Finally, whilst not VAT, is the Government really going to go ahead with the planned NIC increases at a time when the cost of living has gone through the roof? There was widespread outrage after the Government announced a 1.25 percent increase to NI. This is due to take affect in April. With so many concerned about how this will affect their income, surely Rishi will delay the increase.
Our specialist tax partners from around the UK will be watching the announcement and will be issuing a summary of the 2022 Spring Forecast Statement the day after the announcement, Thursday 24 March, which will offer a clear and concise commentary of the main proposals, focusing on the issues pertinent to you, your family and your business. To make sure you receive the full summary, delivered to your inbox, please sign up to receive our Budget publications at https://www.uhy-uk.com/subscribe
