Unfortunately, during these uncertain times one thing we can be certain of is a pandemic tax rise at some point in the future. According to Chancellor Rishi Sunak the UK is currently facing a significant recession “at the moment and this year”. Dealing with the pandemic and its ongoing repercussions have caused a massive surge in UK public spending, which has led to an impending recession with an estimated budget deficit exceeding £337bn, according to the Financial Times. 

 

The tax rises may mostly affect big corporates, yet it does not hurt to be aware and prepared by enlisting the help of accountants to sort your VAT compliance, payroll and year end compliance and budget/cashflows to ensure everything is in order for such time the tax rises come into operation. 

The speculation so far is that the potential UK rise will happen once the economy has recovered from the current pandemic crisis as it would not be viable to introduce such rises while the economy is in recovery. While a tax rise may not be a welcome decision it is necessary for the economy to grapple with the deficit survive. Listed below are some of the potential tax rises: 

While there is a temporary VAT cut for the hospitality and tourism industry from 20% to 5%, the possibility of rises in the UK sales tax cannot be ruled out. As one of the largest sources of tax revenue VAT can make a huge impact even with a relatively small rise. 

There is some talk that an online sales tax could be introduced. While some are of the view that this it will provide a sustainable and meaningful revenue for the government, others criticise it as something that will punish innovation and slow down a natural consumer shift in shopping. 

This may possibly be more relevant to higher earners in the UK, as recent polls show that a significant number of Brits are willing to pay more income tax to help towards the UK government recovering from the pandemic public spending splurge. 

This could potentially place taxes on mansions and on properties deemed high-end or an increase in the inheritance tax. 

These are just some of the pandemic tax increases that are expected to happen. No matter what the actuality is, it is likely to have a greater impact on higher and additional rate payers. However, it would be smart to get in touch with your accountant and revisit your tax liabilities, VAT compliance etc and see if and what action needs to be taken to prepare for potential increases that may affect you or your business. 

 

Contact us for adhoc tax advice Bexley and for guidance regarding the current tax situations, government concessions etc and we will help you make an informed decision regarding measures you should adopt. Being informed and prepared are a smart way to take positive actions towards surviving these uncertain times.