HW Fisher outlines some quick wins for The Chancellor to consider ahead of the Spring Statement this week…
Reduce fuel duty costs
“The proportion of petrol costs going to the Government as tax ( VAT and Duty) is high. The tax rate for a litre of unleaded retailing at £1.65 equates to 51.79% whilst for diesel retailing at £1.80 per litre, the tax amounts to 48.86% of the pump price. This means huge potential for the Chancellor to make filling up cars more affordable – it’s a quick and easy change to implement, and a reduction in duty at the pump could be a lifeline to those who heavily rely on their bikes, cars and vans everyday for work. A 5p cut in the rate of duty should equate to 6p at the pumps.”
Gerry Myton, Partner at HW Fisher
The Chancellor has a lot on his plate – but he must extend VAT relief for Hospitality
“British hospitality continues to cling on. However, the cost of living crisis will be as harmful to the British hospitality industry as Covid-19. Although during the pandemic people were stuck at home, there was still an appetite to go out and spend their money in local restaurants, cafes and bars.
At the same time, businesses are expected to return to a full 20% VAT rate and pay increased national living wages from April.
To say that the Chancellor has a lot on his plate is an understatement, but we urge that he considers extending VAT relief until at least the end of the year to protect the future of British hospitality.”
Russell Nathan, Senior Partner at HW Fisher
Build up activity in the UK housing market
“With energy bills going up, more people are thinking about downsizing, or staying put if they had been considering buying a larger property. We know that property developers and landlords are an easy target when the government needs cash fast. However, if the Chancellor is planning an increase to certain property taxes, including Capital Gains Tax or Stamp Duty Land Tax, this would only further slowdown activity across the entire UK housing market.”
Gerry Myton, Partner at HW Fisher
Cost of living crisis – there’s no such thing as a free lunch
“The Budget is always a balancing act, but the Chancellor now has to keep more plates spinning than most of his recent predecessors.
The Chancellor may decide that the best option is to increase the allowances before tax and National Insurance Contributions are payable. This will help the lower earners most and, if the Personal Allowance is included in the “give away”, will allow pensioners to benefit as well.
However, there is no such thing as a free lunch. Inflation and employment market pressures may result in continued wage rises, but if the Chancellor is less generous in increasing the thresholds for higher rate tax and maintains the frozen limits for clawback of child benefit and the personal allowance then it is only the Government who will be winning.
A modest increase in the personal allowance while tightening the tax bands remains a revenue raising exercise for the Government. The concept that inflation and earnings growth push more taxpayers into higher tax brackets is far from transparent for taxpayers. We might not see a reduction in our take home pay, but the increases simply won’t go as far compared with the current tax bands.”
Tim Walford-Fitzgerald, Partner at HW Fisher
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