Tax - the elephant in the room.
Melissa Geiger, Partner and Head of International Tax Policy at KPMG UK, comments on the Chancellor’s Spending Review announcement: “It comes as little surprise that tax wasn’t directly addressed today. That said, it has been well trailed in the media that consideration is being given to restricting pensions tax relief for higher earners and aligning CGT rates more closely with income tax. If the Chancellor chooses to make more fundamental tax changes as soon as the next Budget, the three tax workhorses of Income Tax, National Insurance, and VAT that make up two-thirds of tax revenues might seem like easy targets. However, the Government made an election manifesto pledge not to raise these taxes and the Chancellor is treating this promise seriously. Business rates are also unlikely to take a bullet in the short-term, given the Government’s focus to boost business on the high street.
“What’s left? Well, COVID-19 has accelerated the shift to digital at a phenomenal pace. The current tax system is built for a 1970s economy and it has been patched up year-on-year since then. The taxation of the digital economy certainly remains a hot topic, although how easy it will be to act on this without an agreed international approach remains to be seen. The other key area where we can expect to see change is in the administration of our taxes and the push on “Making Tax Digital” by HMRC.”
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