Budget: No 'sharp teeth' on tax, but avoidance schemes will feel the biteÂ
Anticipated tax increases failed to materialise, though new steps on tax avoidance were unveiled
The 2021 Budget did not include certain anticipated tax increases, but new steps to tackle tax avoidance and evasion were revealed with the aim of raising £2.2 billion by 2025-26.
Tim Snaith, partner at Winckworth Sherwood, said: “In a number of ways, the budget did not have the sharp teeth so many feared.
“There was no mention of a wealth tax, no wholesale reform to the inheritance tax regime, no sign of the increases in capital gains tax that were thought inevitable and an extension to the SDLT holiday.”
However, Snaith cautioned: “That is not to say that the door has now closed on these changes; in fact, we think it remains wide open and that the Chancellor will turn his attention to some of them in due course.”
He added: “It is also interesting to see the government’s forecast for inheritance tax receipts for the coming year has, for the first time, reached £6 billion. With this news and the OTS’ most recent report on the subject in hand, it remains an area we believe that is due for significant reform in the coming couple of years.”
On tax avoidance, the government said it is publishing a summary of responses following the recent consultation Tackling Promoters of Tax Avoidance, alongside the Budget.
This sets out a package of measures to "strengthen existing anti-avoidance regimes and tighten the rules designed to tackle promoters and enablers of tax avoidance schemes".
The government is set to reduce the penalties that may be charged to those receiving Follower Notices because of using tax avoidance schemes, from 50 to 30 per cent of the tax under dispute. If the tax tribunal rules that the recipient’s continued litigation against HMRC is unreasonable, a further penalty of 20 per cent will be charged.
The government has vowed to invest a further £180m in 2021-22 in additional resources and new technology for HMRC. This is forecast to raise in excess of £1.6 billion of additional tax revenues between now and 2025-26 by enabling HMRC to continue to fund compliance work on the loan charge, historic disguised remuneration cases and early intervention to encourage individuals to exit tax avoidance schemes.