Reaction to the Budget from Rebecca Durrant Partner, National Head of Private Clients, Crowe U.K. LLP

The Chancellor has revealed his ‘three part plan’ to lead us out of the pandemic and set the country on the road to recovery.

He committed to protect jobs and business and there was some good news for hospitality and retail with furlough extension and grants for the self employed, including the newly self-employed who have been unable to claim before. This alongside the business rates extension and VAT cut will help rejuvenate businesses.

There was also some good news for property investors with the expected extension to the SDLT holiday until June for properties up to £500k and to September for properties up to £250k. This was in addition to the government backed borrowing on mortgages of up to 95%. These measures will no doubt ensure that the current boost to the property market continues and will help to support the labour market as people are able to move more easily.

There was no real news for private wealth as the Chancellor stuck to his triple tax lock, but the freezing of personal allowances and higher rate tax brackets at 2021/22 rates – £12,570 and £50,270 will increase the tax take. All other rate bands such as inheritance tax and capital gains tax were frozen.

The biggest impact will be for business owners as whilst we expected the CT rate to increase, a rate of 25% from 2023 was a surprise. This will affect the ability for business owners to withdraw cash from their businesses so budgeting for the future will be important.

For smaller businesses the rate of 19% on first 50,000 profits will still apply, with rates tapered up to £250,000.

The tax rate is tempered by the new ‘super deduction’ of 130% of costs which it is hoped will encourage investment in the UK and boost the coffers by increasing the tax base. Which will be needed if we are to fix the borrowing position.

The Chancellor reported record borrowing of £355bn which represents 17% of our national income and is the highest since WW2. This clearly needs fixing, as expected the big news around major tax reform for capital gains tax, inheritance tax and any income tax rises has yet to be seen. Those affected by this will need to wait a while longer before we have any clarity here.

Rebecca Durrant

Partner, National Head of Private Clients, Crowe U.K. LLP