Budget forecast

SMEs warned of ‘tax grab’ in new year Budget

Rishi Sunak

Rishi Sunak is expected to hit businesses

An SME tax specialist is urging business owners to take advantage of incentives to invest, or to sell up ahead of an expected ‘tax grab’ in the 2022 budget.

Aileen Scott, head of tax in Scotland at accountancy firm Azets, is predicting harsher rules in the Spring, along with the withdrawal of several attractive tax breaks.

In the Autumn Budget, the Chancellor forecast economic growth of 6.4% by the end of 2021. However, inflation is forecast to rise to 4% next year and interest rates are expected to increase, with businesses having to bear a range of higher costs.

Ms Scott said: “For many SMEs, the Covid support measures available today won’t be sufficient to offset rising costs and we would encourage business owners to take advantage of every available allowance.

Aileen Scott

Aileen Scott: harsher rules

“The Annual Investment Allowance, for example, has been retained at £1m and provides 100% capital allowances on qualifying expenditure.

“The ceiling for Business Asset Disposal Relief – formerly known as Entrepreneurs’ Relief – has also been left untouched at a 10% capital gains charge up to the first £1m.

“Anyone thinking of selling their assets or shares would be wise to bring forward their plans as the allowance could well be reduced or removed entirely.”

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