Autumn Budget 2021
The Chancellor of the Exchequer, Rishi Sunak, exuded optimism throughout his 2021 Autumn Budget speech which focused on increased departmental spending and infrastructural investment. Rising wages, rising investment, better than expected growth and reducing debt were some of the main macro-economic themes set against the backdrop of a pandemic which has caused the UK Government some considerable fiscal headaches over the last 18 months and more.
With most of the tax rises necessary to help pay for some of this additional investment having been announced earlier this year (e.g. the increase in the corporation tax rate to 25% and the introduction of the Health and Social Care Levy) there were very few new additional tax revenue raising measures mentioned. In particular, areas which are commonly viewed as ripe for reform, such as the capital gains tax regime and how we tax wealth, appear to have been given a further stay of execution. Many observers were also surprised by the lack of attention given to “green” tax measures, particularly in light of the forthcoming climate change conference. In addition, the Chancellor is yet to address the potential effect on the corporation tax landscape of the recent OECD proposals that seek to address the tax challenges of digitalising the economy, which include the introduction of a minimum rate of taxation for certain multi-national enterprises.
For the Crown Dependencies, the majority of these latest tax policy decisions are not likely to have a major direct effect on local businesses, holding structures or individuals. Of all the changes to be legislated in the upcoming Finance Bill, the introduction of the Asset Holding Company regime may possibly have the biggest impact in the sense that it is a clear attempt to position the UK as a “funds-friendly” jurisdiction and thus an alternative to the likes of Luxembourg and Ireland. Given the close business ties and favourable double tax treaties in place, this may prove a positive change for funds service providers in the Islands.
Please see our “On a Page” document for further detail of some of the tax measures announced.
Download the 'on a page' document now