Over recent years, reports on potential changes to longstanding tax principles have been fairly regular; be they in relation to potential increases to capital gains tax, changes to inheritance tax or a possible wealth tax. With the recent change of Prime Minister, discussions around a change of tax policy are rife.
In the Conservative Party Leadership Debates to decide who would replace Boris Johnson as Prime Minister, Liz Truss and Rishi Sunak's proposed takeover policies diverged heavily on tax. Rishi Sunak's policies focussed more on maximising taxes to stem inflation, whereas Liz Truss' pledges centred around cutting taxes immediately in order to starve off a recession.
As our new Prime Minister, among the many purported plans, Liz Truss is reportedly considering:
- stopping the planned increase of corporation tax from 19% to up to 25% currently set for next year;
- reversing this year's 1.25% National Insurance Contributions increase;
- increasing the threshold for basic and higher rates of income tax, and freezing the 40% threshold;
- reducing VAT by 5% for certain supplies; and
- temporarily suspending green energy levies.
With record inflation, record energy prices, the cost of living crisis and the Bank of England's gloomy forecast of recession, tax and economic responsibility may never have weighed heavier.
A detailed plan is widely expected to be announced by the new chancellor, Kwasi Kwarteng, in an Emergency Budget shortly.