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Beyond the balance sheet

PODCAST: The Budget 2021 with Tom Biggs

Chris Thompson Mar 22, 2021 2:01:57 PM 27 minute read

Chris Thompson talks to Tom Biggs ACA CTA about the announcements from the Budget 2021. 

A Budget of spending announcements and tax rises. 

In this episode of Beyond the Numbers we discuss Rishi Suank's extension of much of the COVID-19 pandemic support, while also assessing the tax rises that will impact both individuals and businesses from the Budget 2021 announcements. You can listen to this, watch it, or read the transcript below. 

Start preparing for the tax changes ahead! Download your FREE Budget 2021  guide today >

Chris Thompson:

Welcome to another edition of beyond the numbers and once again I am joined by one of our tax specialists, Mr Tom Biggs. Tom how are you doing?

Tom Biggs:

Good morning Chris, yeah, good thanks. Good. You okay?

Chris Thompson:

Yeah all good thank you. We're here to assess or analyse the budget. We're about a week, a week, since the chancellor's announcements and I think the the dust, the dust is settling isn't it?

Tom Biggs:

Yeah, I think, people have a bit of time now to sort of take in the various announcements.

Chris Thompson:

Read through the small print Tom?

Tom:

Well exactly that's always the key with this Chris, it's very easy for the Chancellor to stand up at the box and sort of make these make these announcements but actually a lot of the detail that gets released afterwards and fine print really takes a bit of time to go through. As I'm sure you can imagine, indeed what he announces and what actually happens, they have to be looked at carefully.

Chris:

So I thought what I'll do is I'll start off with a bit of the big picture on this because once you've got the big picture that then gives context to some of the announcements and my sort of take on this if you like. This is a chancellor who's expecting inflation moving forward and I think it's also a Chancellor who's quite concerned about potential interest rate rises.

So, one thing I think I took from this is that national debt is projected for the UK to rise about £2.8 trillion going forward. The reason that I think he's concerned about inflation is obviously you've had a huge amount of government stimulus and basically there's a lot of that this time around that has sort of put cash in people's pockets. Sure unemployment has gone up, but actually a lot of people have still remained in work and have almost been forced to save.

So, they've been at home, they haven't been, you know, commuting as usual, going out eating and drinking as usual. So, in a sense there's a lot of forced savings and of course as things open up, what you have there is pent-up demand that might be unleashed on the economy. And then factor in that, you know, with COVID-19 and the pandemic, a lot of international supply chains have been smashed so you potentially have a sort of scenario there, I guess whereby you know you've got a lot of demand chasing potentially too few goods and too few services potentially.

When you have a situation like that, prices can rise, so inflation may be coming back as we know it, rising inflation could potentially force up interest rates to try and keep it under control. That then gives the chancellor a problem because it then potentially puts up the interest bill on the uk's debt. And if that happens, well then our debt costs us more, and if our debt costs us more that could blow a big hole in the government's budgets and spending plans.

So, I was watching Spectator TV and they were saying, you know, if there's a one percentage point increase in interest rates that leads to the need to find the equivalent of the education budget. If it's a two percentage point increase that would lead to the need to find the equivalent of the defence budget in terms of our spending plans and covering off the interest bill.

So, clearly the chancellor's very concerned about this and it's this in particular, not paying down the debt, but just the fact that spending could be derailed by interest rate rises, this is why we had the budget that we had which is one very much of tax rises and I would argue stealth tax rises. On that note Tom over to you because I think the first thing we're going to cover is actually some of his spending plans.

Tom:

Talking about, talking of all the debt, so we'll obviously come on to the various bits of this but I guess the way I saw this is that you know we could, we could sort of, put the budget into 3 sort of main areas from a tax perspective I suppose. The first evidence we'll talk about is Coronavirus Support, an extension of various measures which obviously the Chancellor has seen as necessary given where we are with the pandemic.

The second area is business tax, so there are changes to Corporation Tax on the horizon, and various incentives for spending, funnily enough, which links into what you were saying about this pent up demand.

Then there are also announcements in regards to not just personal tax, but tax for individuals generally, so things like Capital Gains Tax which we obviously touched on before the budget, Inheritance Tax, there were announcements on that that kind of stuff. So, there's main areas really that we can break it down to, and that we will talk about here.

So the first one, Coronavirus support, now we obviously sort of touched on some of these in our previous video whereby we were anticipating that perhaps he might turn around and extend the VAT reduction for leisure and hospitality. That was due to end I think, it was at the end of March, so we talked about possibly extending that, as it turns out that's what he did!

So that has been extended until I think it's the end of September 2021 after which, then what happens, rather than it going straight back to the standard rate of 20% which is obviously quite a big jump, there'll be what's called a transition period whereby there will be this new rate of 12.5% that will apply from the 1st October through to the 31st March 2022.

Then from 1st April onwards, then we're back up to the 20% rate so so actually in terms of time frames although it goes up to 12.5% from October he has extended it by, you know, effectively a whole year, pretty much, before we get back up to the main rate of 20%. So a tick for us there Chris, we predicted it.

Chris:

That crystal ball was working there Tom. It was good that one. We worked on quite a few, but not all of them, some of them.

Tom:

Another one that we we talked about Chris, talking about our crystal ball was the SDLT holiday. Stamp Duty Land Tax, so obviously for people moving there was the reduction in Stamp Duty so you know in the vast majority of cases people wouldn't be paying any Stamp Duty up to I think it was a £500,000 threshold. That was due to end at the end of March and as we talked about in the last video. Given the lockdown actually property transactions have been sort of slowed up, so there was a risk that there were going to be some people that were looking to benefit from this and actually they'd fall foul because they wouldn't actually complete by 31st.

Chris:

They wouldn't complete in time.

Tom:

Yes, so that was extended to the end of June and again, there will be a a bit of a transition whereby from the 1st July 2021 the £500,000 effectively like a nail rate band, if you like, where you pay 0% that will be brought down to £250,000 which is still higher than what it was previously. What was it previously Tom? Previously I think it was £125,000 which is what it's going to return back to.

Chris:

Gradually moving down?

Tom:

It will gradually move down, yes. So again it's not, it's not, a cliff edge if you like whereby we'll go from the reduced measure straight back to how it was before. We've got a bit of a transition period so another tick for us Chris, we've got that one right.

Chris:

Starting with all the good news Tom. This is good this, isn't it? If only it carried on like this.

Tom:

Those 2 things he's extended. He's also, I think this actually came out the night before the budget, effectively the furlough scheme (Coronavirus Job Retention Scheme 'CJRS') which was due to end at the end of April 2021, has been extended again, so that will run through to the end of September 2021.

Now there's some subtle amendments going on there. There are some changes to CJRS. So, first and foremost for employees to qualify, they had to have been on the payroll and an RTI submitted by I think it was 2nd March or 3rd March. It was either a day before the budget, or the budget itself. That potentially brings forward the qualifying date which previously was the end of October for the scheme to April. So for claims from May onwards, potentially a greater number of employees may qualify if they're on the payroll between that period.

Also from July, employers will start to have to contribute towards the furlough pay, similar to how it was before when it was being phased out, or due to be phased out back in October 2020 before it was extended for the first time. From July, employers will have to pay 10% of the wages so effectively to get to that 80% overall figure the government will pay the 70% of that and then the employer will have to pay 10%.

Effectively they're going to start to contribute from August and September. That then goes up to 20%, so again the government proportionally pay 60% the employer will have to contribute 20% even though the increasing employer contributions, effectively you've got a scenario whereby if you've got someone on furlough, and they're not doing any work for you, effectively you've still got to contribute at least 20% of their furlough wages.

Same as how it was before, it's just being gradually phased out and then when we get to October obviously, then the scheme is due to go. Now we were in this scenario last year, so I'll believe it when I see it Chris.

Chris:

I know some of the SAGE scientific advisors were saying there could be another outbreak in the winter, going into the winter so I guess that seems to be the plan.

Tom:

It will be phased out completely as of October, we shall see, the jury's out on that one, but in theory that's what's just happened. Now similarly with the Self-employment Income Support Scheme (SEISS), again that was due to come to an end, there's now going be a further two grants. There'll be one that covers February to April 2021 which will cover 80% of 3 months average trading profits. You need to have had your personal tax return submitted 2019/20 by midnight on the 2nd March in order to claim that grant.

There's going to be a 5th and final grant, technically subject to be extended again coming in that will cover May to September and that will be based on effectively a turnover test. So, if your turnover's fallen by 30% or more your grant will be 80%, similar to the 4th one. If actually your turnover's falling by less than 30%, your grant will be 30% tax free so you've got a difference depending on effectively how how much you've suffered, if you like, how much your turnover has been impacted by Coronavirus.

So an extension none the less which is obviously good news in terms of trying to transition out lockdown and hopefully if the Prime Minister delivers on his dates for completely easing things at the end of June, hopefully back to some sort of normality I suppose.

Chris:

Excuse me, if he delivers?

Tom:

Ha ha, Chris, again who knows, yes. So the extension of all those bits which hopefully will help, you know, both businesses and individuals but obviously they know the plan is for them gradually to be phased out. Despite all the discussion from the Chancellor about the debt being where it is the first thing was that we're going to be spending more on extending this which obviously is just where we are. So that's sort of definitely expected, that support.

Obviously we're not covering everything in this because we could be here till Christmas if we did. Then we're sort of moving on to business taxes, we're going to start with Corporation Tax.

Chris:

Now Tom, in our previous video which you can catch on our website (www.wellersaccountants.co.uk) and on You Tube, you weren't sure that he'd do this. You were skeptical that he would go this route, but he has gone with it, what's he done with Corporation Tax?

Tom:

Well I'll address that first, okay, so I was sceptical that they'd get it through now, given where we are, and what I would say is that any changes are coming in from April 2023. So I'm going to take this as a half win because he wasn't looking to push it through now but it is going to go through at some point. What this was kind of, the almost the headline of the Budget was Corporation Tax going up.

The plan from April 2023 is that Corporation Tax will rise to a headline rate of 25%. Currently we're at a position where everyone, every company pays 19% regardless of your profits, you've just got one level. Whatever size you are, you pay 19% on your taxable profits. What's going to happen from April 2023 is there's going to be a headline rate of 25% and that will apply to taxable profits over £250,000 in broad terms there'll be certain rules like with associated companies where those thresholds will be divided by boot companies, that kind of stuff.

We won't go into that for now, but in general terms for a standalone company, if your profits are over £250,000 your taxable profits will be subject to a corporation tax rate of 25% rather than 19% as it is currently. Now for small companies, if you like, there's almost like it used to be referred to as a small profits rate. So, if your taxable profits are £50,000 or less you're still going to be at the 19% Corporation Tax rate.

Chris:

What if you're in between?

Tom:

We'll come to that in a minute Chris. If your taxable profits are less than £50,000 you won't actually notice any difference in the Corporation Tax rate. I think the Chancellor was quite keen to point out, there was something announced whereby he felt as though it'd only be 10% of companies that would be subject to the higher rate, or something like that. Anyway that's kind of where we are now, as you've stated that we've obviously got a difference between a £50,000 lower rate and the £250,000 headline rate. Now in between that, there'll be what they refer to as tapering, so where you're within that the rate you'll pay will be a slightly different rate, which I think works out to be something like 26.5% technically on the profits within that band to get you up to the 25%.

So effectively you're going to pay a blended rate almost in between those bands, so there's a bit of tax planning that can be done around that and effectively certainly from a group perspective to try and make sure you're not within that marginal rate. But in essence Chris this is basically a return to the Corporation Tax regime as it was back in, I think it's, pre 2015. There was effectively this marginal rate with lower and upper limits so we're kind of returning back to where we were before.

After all that, after George Osborne and all that, we're back to where we were. That's going to be brought in as of April 2023. So you know the Chancellor has been quite generous in the short term and giving companies effectively two years to kind of plan if you like for this coming in.

Chris:

Do you think there's a chance that this could be reversed? Say the economy really does boom when everybody comes out and, if the economy booms so the tax take should increase because people are out spending, more income tax blah blah blah blah blah blah there's a chance given it's got a fair chunk of forward planning to it that he might then go in a later budget, actually our tax take is better than we expected, I'm reversing the Corporation Tax change.

Tom:

I mean in theory Chris he could do, I mean it's kind of you know, again we need to probably get an upgrade for our crystal ball!

He could do, in fact he's saying it will come in 2 years, he's obviously giving himself a bit of wriggle room to, to sort of you know turn around and say oh actually you know we don't need to, you know we done great we've done you a favour actually we're not going to bring it in. So, difficult to say it could do I mean who knows, you know over the last few years we've had snap elections and whatever else. If we find we have an early election before the fixed term Parliamentary law kicks in then you know, who knows?

It's a possibility it could all be reversed.

Chris:

Okay it all depends on seeing what happens with inflation, what happens with interest rates, and what happens with the tax take to understand what might happen with Corporation Tax going forward. It's not necessarily set in stone.

Tom:

That's right, now, one thing sort of linked to Corporation Tax um which is actually coming in sooner than the April 2023 date is that the Chancellor announced this Super Deduction, he called it. Now I think he probably needs to get a new PR company because surely you can come up with a better name for this particular tax allowance.

Basically from 1 April 2021 if you incur expenditure on certain, what they call, qualifying plant machinery generally, so anything that you would have benefited from main pool Capital Allowances, which is effectively a tax depreciation that you get off at a a set rate for your Corporation Tax profit. So anything that you spend after 1st April 2021 up to the 31st March 2023 you'll get a 130% write-off against your taxable profits for that expenditure.

In broad terms if you spend £10,000 let's say on a bit of plant machinery, or fixed assets, that would fall within that category, you'll benefit from a from a £13,000 offset against your taxable profits.

Now the the key there is it's offset against taxable profits, not against Corporation Tax. So it would reduce down your taxable profits that whatever tax rate is applied to in future, you know, in future years. At the moment it would be 19%.

Chris:

So less of your profits are subject to Corporation Tax?

Tom:

Yes, effectively.

Chris:

If you qualify for that Super Deduction in terms of Capital Allowances that you mentioned?

Tom:

That's it yes, so effectively you're getting an extra 30% of the cost written off against your taxable profits basically. Now the key is that Capital Allowances can apply to unincorporated businesses, not just companies. They're within the Capital Allowance regime. However that super deduction, one of the conditions to qualify for that is that you have to be subject to Corporation Tax, so by definition the super deduction is only available for companies, limited companies. It's not available to unincorporated businesses.

So you know, quite generous, to try and offset obviously the pain coming down the line in the future. But again the idea of this, as I understand it, is that by giving companies a 130% offset against taxable profits, it's hopefully going to encourage them to go out and spend money and get the economy going again, which is kind of what you know what we spoke about earlier.

Chris:

So, he's trying to kick-start the economy a bit.

Tom:

Exactly you know we're trying to yeah get the costs down a bit aren't we really.

Chris:

He's in effect sort of reversing what George Osborne did. George Osborne was less generous with the allowances but reduced Corporation Tax from memory.

Tom:

Yes Rishi's reversing that, going the other way, he's raising Corporation Tax but being a bit more generous with some of the allowances. Why exactly, because the thing is I think we spoke about this on the last video Chris, is that we know with Corporation Tax going up, effectively because of their manifesto, their hands were totally tied.

Chris:

You know their manifesto they got elected on back in 2019, I think December 2019, it was on the basis that they wouldn't increase Income Tax, National Insurance, and VAT. This is a Chancellor a little bit caught in the headlights because his Prime Minister wants to spend and spend pretty big, but at the same time he doesn't want to tax that much more. And he said well, you can't touch the following taxes and Sunak is left on a bit of a sticky wicket as to what can he do? Rates may then rise and he might have a big hole in his spending plans.

Tom:

Exactly so you know, a bit limited so Corporation Tax going up you know what was this obviously not great. Touching on what we spoke about before, with you know, Brexit and that kind of stuff, it's not coming straight away but you know the tranche is currently a bit limited as to what you can do really, and so you know until there's another election and a new manifesto put in place really.

So, his hands are somewhat tied. Somewhat, I say, because I'm sure later on we'll talk about some of the other stealth taxes. Before we move on to the sort of individual taxes if you like, personal taxes and that sort of things, another bit that falls within this business tax was a relaxation of the loss carry back rules. so in general terms, when we talk about business we're talking about an unincorporated business, or a company, and in general terms you could carry back a loss to the previous year and that's it.

If you cease to trade it's a bit more flexible, but we'll ignore that for now. Now, what the chancellor announced is that actually there's going to be a relaxation of that, to take into account the fact that particularly over the last year a lot of businesses have been loss making.

Obviously given the pandemic and everything else, they're trying to, he's going to relax the loss carry back rule so that rather than just carrying back for 1 year, you can carry back for up to 3 years. So future profits versus last 3 years worth of potential losses?

Yes, so there's going to be a bit of decision making here which is going to depend on obviously what your future profits are going to be which if your company could go up to 25% as we just spoke about, versus the the immediate cash flow benefit, if you like, of carrying back to a previous year that may have been profitable and therefore getting a refund of your tax due. But that's obviously going to be a lower rate which would have been you know 19% or you know, maybe just trying to think, whenever it's coming, but in broad terms it'll probably be 19% versus obviously carrying forward but not getting that cash flow benefit for at least another couple of years.

But the fact that there is a bit more relaxation of that, you know, it is good for businesses really at least gives them an option particularly from a cash flow perspective to tap into those losses that have been realised over the last year. So, like I say that applies to both companies and incorporated businesses, you know sole traders, partnerships etc. Good news for them really, a bit more flexibility.

Chris:

Excellent so that sort of covers organisations, companies off. And and then we're moving to individuals Tom, and this is where it all gets a bit smoke and mirrors, if you like?

Tom:

Yeah so as we touched this on just a minute ago, The Conservatives were elected with a manifesto that they wouldn't increase Income Tax, National Insurance, and VAT. So effectively Rishi Sunak was a bit limited in terms of being able to put up taxes to try and reduce down our debt. So what he has done which is a bit of, it's probably not correct to say it's a stealth tax because it's going to be dependent on wage rises, inflation, and that kind of stuff.

But if we work on the assumption that in general inflation will go up and wages, you know, carry on an upward trend over the next few years, there will be an increased tax take from Income Tax, National Insurance, and a couple other taxes that we touch on in a minute.

Chris:

Whilst he hasn't increased taxes in terms of rates and that kind of stuff, what he has done is effectively frozen thresholds and allowances, the idea being obviously the thresholds and the allowances will stay the same but if wages are increasing over the years more people fall into higher tax bands. Or as an individual, as say, inflation rises and thresholds don't then you find that a greater share of your income ends up going to the taxman because you're going into a higher tax rate than you would have if those tax bands had risen with inflation.

Tom:

So over the next tax year being 2021/22, the thresholds will go up slightly as they were intended to which is generally in in line with CPI basically.

Chris:

So they'll go up next but then from that point they'll be frozen until April 2026, five years basically.

Tom:

Exactly which is again going back to what you spoke about before. We're going to see an election before then, so whether it does stay frozen until that point will you know will be debatable I suppose because it depends on what you know what people are trying to get elected on.

Chris:

I think that's very stealthy Tom. I think he's very stealthy! So you know no direct tax rises for individuals but indirectly, if we work on the assumption that inflation and wages will go up, more people will be drawn within income tax and national insurance and/or into a higher rate as well.

Tom:

So what was announced to step away from that and give a quick overview of it is that, for income tax there aren't going to be any rises but the thresholds so the personal allowance thresholds and the basic rate band threshold etc will rise in 2021/22 and then will remain at that that point until April 2026. So from this April, from the 6th of April 2021 they'll go up and then be frozen.

The same thing will apply to National Insurance, you know, the primary earnings threshold, the lower profits limit, the upper earnings limit etc. they will rise slightly with CPI as as was intended anyway but then they're going to be frozen until April 2026.

The same thing applies to Capital Gains Tax, the Annual Exemption is going to be frozen until April 2026, the pensions savings, the lifetime allowance that's going to be frozen until April 2026. Inheritance tax and the nil rate band, which we spoke about in the previous video, that is going to stay at £325,000, and also the the resident nil rate band and the other one for private properties is going to stay at £175,000 until April 2026.

So, you know we spoke about this on Inheritance Tax.

Chris

Yes, we did, yes.

Tom:

The nil rate band as we said before has been £325,000 grand since 2009. So, if this holds true it's going to have been frozen from 2009 to April 2026, at the same level. So that's obviously a nice little earner that one, pretty good, that's really good you know especially with, you know, how property prices in particular have sort of risen since that point, it's not bad is it? So in broad terms, no direct rises but probably indirectly there will be an increased tax take through those measures.

Chris:

I'll put a personal opinion on that, I think it's very stealthy as I said, I mean, if you wanted to sort of you know look at optimistically almost you could say he's actually been quite clever because he's kind of he's kept a manifesto pledge by not increasing taxes. But by freezing it he has managed to increase the tax take from those areas anyway yeah so it's clever, it's shrewd.

I think Gordon Brown was particularly fond of freezing thresholds to get people into tax bands and things like that so it's, he's either reversing what some of the previous Chancellors have done or he's re-introducing things from the past.

Tom:

It's funny enough because, touching on that, and it's not necessarily within that, but one thing that was brought in was this mortgage guarantee scheme.

Chris:

Yes...

Tom:

Which is effectively, you know, a government-backed scheme whereby people can tap into, buy a property with a 5% deposit, now you know tapping into things that previous politicians brought in, this is fairly similar to the Help to Buy Scheme that George Osborne and David Cameron brought in. You're going to give your opinion on that? Well I mean just stuff you read is it didn't  really work out the way that it was intended because effectively, from my understanding, it kind of pushed property prices up which kind of then it becomes a bit of a vicious circle.

Chris:

It was to help first-time buyers onto the ladder given how high property prices were relative to average incomes, that kind of thing.

Tom:

Yes exactly. The more you stoke up demand, you know, prices go up and so you know certainly a lot of critics saying actually it didn't really work because it obviously pushed up prices. And then that 5% deposit figured so I guess we'll see what happens with this but it's interesting that this was kind of announced but it is actually fairly similar to the scheme that was previously brought in.

I think it's due to be phased out as well, so sort of similar to what you're saying I suppose, in terms of going back to previous policies you know we're looking at Corporation Tax, that sort of stuff going back to the previous stuff that was actually brought in. This Mortgage Guarantee Scheme is another example of that.

Chris:

It's a bit like sort of fiddling and tinkering. This was a budget of plenty of fiddling and tinkering around the edges.

Tom:

Yes I mean really apart from obviously what we spoke about there wasn't a massive amount when we look at tax really other than those bits there. But I think coming full circle and going back to what you spoke about, the fact that he he stood there and talked about the debt pile, and the fact that you know, if interest rates go up there is this big risk.

Just because they haven't brought in some of those bits that we spoke about in the last video, so the Capital Gains Tax rises that sort of stuff, I'd be surprised if they aren't brought in at some point because you know my personal feeling is that the reason he stood there and said you know kind of made it fairly bad to everyone, that we have this massive debt pile, it then kind of paves expectations moving forward that actually taxes probably will go up at some point.

They're not going up now because, you know, technically we're still in a lockdown, so not gone up now, it'd been difficult to sort of certainly start pushing a lot of taxes up now. But I'd be surprised if some of those bits that we spoke about in the last video aren't aren't actually brought in at some point over the next few years.

Chris:

So it's your classic debt scenario of spend today, pay for it tomorrow?

Tom:

Yes exactly, and like you said at the start really, this threat of interest rates going up, this is a real threat given given the level of debt that we've currently got.

Chris:

Well that's that's interesting I think that covers almost everything doesn't it Tom?

Tom:

I think so yes, like I said over the main bit there's a few other bits in there ,you know, fine detail and stuff but they're the main bits really I've been through Chris.

Chris:

I'll finish off on a topic that I've probably mentioned in posts and on the Wellers' blog in the past, and in conversation with you on the podcast. I think the biggest the biggest issue that I see that successive Chancellors don't seem to address, is the state and size of the UK tax code.

So, you know I believe it's now something like 21,000 pages, or it was prior to this budget, equating to something like 11 million words, 10 or 11 million words. Well that's almost as gargantuan as the UK's national debt! We have an Office of Tax Simplification and we've had that for a while and yet, you know the tax code, we don't seem to see legislation being cut or reduced.

We just seem to see Chancellors fiddling around the edges and adding more, and I think that there must be no one individual who can know all of that, and understand, and know the whole of the tax code. It's too big! I think 11 million words, I think they're saying is more than the average person reads in their lifetime!

So, putting a personal opinion forward here I can't see how that's good for the UK economy. The opportunity cost for people navigating the tax code, understanding it, filing their tax returns trying to achieve legitimate tax savings, using reliefs, must take up a huge amount of time and money that frankly could potentially be put into other possibly more productive means.

I think you have to look back to the 1980s and Nigel Lawson for the last Chancellor who actually started removing taxes and cutting tax legislation. Since then, certainly through the 1990's, 2000's, 2010's, successive Chancellors have just added more, and more, and more. Now we have this gargantuan book, if you like, that no one person could read the whole of it in their lifetime, let alone understand it all.

And I think the Office for Tax Simplification, correct me if i'm wrong Tom, but they seem to just be in anti-avoidance measures whereby for every announcement that's made, they then create more legislation to guard against potential tax avoidance issues.

Tom:

Yes I think you're right. I think there's, you know to an extent, the trouble is that there's an element of kind of having to close certain loopholes and that kind of thing in the legislation when things are introduced. They're meant to be used in such a way it can often be the case that loopholes are found and actually it's applied in a different way. So as a result you've then got to introduce separate legislation on top of what you've already got to try and close that off, so it's it's a tricky one Chris.

So, that's a difficult one, I would just touch on what you just said there really, if for nothing else, reducing the tax legislation would be great for all the students doing their tax exams because when I did mine a few years back, you know, you go into the exam you're allowed the legislation there. I mean the amount of books that you have, you know there are various people that turn up with suitcases of these books. It's insane, and you sort of see them there, so you know for nothing else, just for the tax students really, it'd be great to reduce down the books that they've got to carry around, so heavy.

Chris:

Just just shows how clever you folks are Tom!

Tom:

Ha ha, something like that Chris.

Chris:

And on that bombshell I think that's a good note to finish on. Thank you very much Tom. Be sure to tune into the Wellers' blog for more analysis on the budget and all sorts of other tax matters especially Corporation Tax which is explained on there.

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Wellers Guide to the Budget 2021

The content of this post was created on 22/03/2021.
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