Are tax hikes likely to pay for Coronavirus?
It is impossible not to have noticed the effect that Covid19 has had on our economy.
Next month (July 2020), the Chancellor of the Exchequer, Rishi Sunak, is set to announce a stimulus package which will attempt to, according to the Financial Times, “mitigate what is expected to be the biggest recession in living memory following the coronavirus crisis”.
Although the Treasury has said that the announcements will not be a second budget, whatever these measures are, they are likely to add to the cost of the vital measures already put in place.
Concerns have been expressed that the government may take this as an opportunity to introduce changes to taxation that, politically, they may have found it difficult to do at any other time.
In September last year, I looked at some proposals for changes to inheritance tax and capital gains tax and it may be that the implementation of some of these proposals may be accelerated. There are fears amongst the profession that Business Property Relief and Agricultural Property Relief (both of which are very valuable and useful reliefs) may be targeted; and it is quite possible that the current ‘capital gains tax free’ uplift in value that can be benefitted from as a result of rebasing assets on death may be withdrawn.
Whilst it remains to be seen exactly what measures are put in place to finance what has been a significant (but absolutely necessary) level of spending by the government, now is the time for individuals to review their estate and tax planning whilst the current reliefs and exemptions are available; and whilst we know they work. This is particularly relevant to those who want to make provision for future generations by outright gifting or utilising trusts (which the government targeted in 2006 and could be subject to another review again).
Bruce Clarke leads Rix & Kay’s Private Client Team. With eleven years’ experience of advising individuals on how to effectively manage their personal wealth, he has a detailed understanding of personal tax planning, creation of trusts and the administration of estates. Contact Bruce for more information and an informal chat about your options for estate planning. E. email@example.com t. 01732 440 853