By James Fraser, Tax Partner, Armstrong Watson LLP

AT the recent Conservative Party conference, Chancellor Rishi Sunak stated that whilst he wanted to lower taxes, funding the pandemic recovery “comes with a cost” and he is keen to put the country’s public finances on a “sustainable footing”. 

This very much sets the scene for potential Autumn Budget tax increases, but what might this mean in practice?

When it comes to looking at specific taxes the Chancellor might increase, the abolition of higher rate tax relief on pension contributions seems irresistible, as does an increase in Capital Gains Tax and possibly Inheritance Tax.  

Increases to Corporate Tax and National Insurance Contributions are already in the pipeline, while tax freezes announced in the spring - the income tax personal allowances and the higher rate threshold (frozen from April 2022 to April 2026) – limit the Chancellor’s options. These changes will bring many more people into income tax or the higher tax rate, so-called “fiscal drag”.  Coupled with wage inflation, this may also help the Chancellor by increasing the level of payroll taxes raised. 

With the Budget being held just a few days before the UK hosts the COP26 UN Climate Change Conference, the Chancellor is also likely to use this as an opportunity to announce measures intended to prove the Government’s green credentials. These could include incentives or funding for climate favourable activities, such as hydrogen cell technology or greater incentives for green research and development, and possibly heavier taxes or levies on dirty or polluting activities or industries.  

Tax on fuel pump prices might be another tempting option, particularly diesel, as duties have not been increased and tax revenue has fallen over recent years. However, this could prove hugely unpopular given recent ‘shortages’.

Many commentators have predicted CGT increases over recent years and been wrong, but anyone contemplating asset disposals or the sale of a business should certainly be considering whether now is the time to do it rather than after April 2022. 

Entrepreneurs looking to extract money from their business should also consider doing that now rather than risking the possible impact of higher tax rates generally. Meanwhile, businesses looking to invest will want to watch closely to see whether existing incentives remain and whether new ones are introduced which will make it attractive to them to invest in line with the Government’s new economic vision. For tax advice and support please contact James Fraser on 07793 621979 or email