Saturday, May 21, 2022

2022 Business Predictions: Tom Moore, Director at WestBridge Group

It’s that time of year, when Business Link Magazine invites the region’s business leaders to offer up their predictions for the year ahead. 

It has become something of a tradition, given that we’ve been doing this now for over 30 years.

Here we speak to Tom Moore, Director at WestBridge Group.

We are often asked – usually ahead of the Chancellor’s Budget – what changes we expect to see in UK tax law. It is notoriously difficult to predict changes to the tax system, but a forecast for the year ahead may be aided by understanding the main factors that drive tax policy.

Whoever is the Chancellor is also an elected politician and the political effect of any tax changes will be a heavy factor in decision making.

The Chancellor, however, also bears the burden of ensuring the country’s long-term economic prosperity and does not work alone. They lead the government department – HM Treasury – that employs the custodians of the UK economy. In Civil Service terms, this is an elite Praetorian Guard that carries out its responsibilities with a resolute determination to protect the nation’s economic interests, whichever party is in power. Their expert and steadying influence is a major driver of decisions on tax.

There can be a tension between decisions that are politically popular and ones which are economically sage – but not always. In some circumstances, a well-judged tax cut can help economic growth and increase tax receipts.

Finally, in fiscal policy, the UK is not an island. International comparisons can give a clue to the direction of travel in tax policy.

After the havoc wreaked on national finances by the pandemic, it would reasonable to expect some revenue raising measure in 2022, especially since there will be time for political wounds to heal before the next General Election. However, much-discussed increases to Capital Gains Tax (CGT) are unlikely (beyond some minor changes). This is a view supported by The Treasury’s cool response to changes suggested by the Office for Tax Simplification. Increases to CGT, counter-intuitively, can decrease overall tax take. The rules apply, predominantly, to the fiscally-mobile who may be attracted to more favourable tax regimes. Rates are already relatively high by international comparison.

More likely are changes to taxes on dividends and perhaps National Insurance. The base of these taxes is much broader (and so the revenue effect is greater) and the Government has already made small increases in rates, without significant political fallout.

The other likely area for change will be VAT which is broadly regarded as a “fairer” tax and produces high yields. It would also not be too surprising to see some form of wealth tax introduced. This could produce significant income and would fit with the government’s ‘levelling up’ agenda.

A message from the Editor:

Thank you for reading this story on our news site - please take a moment to read this important message:

As you know, our aim is to bring you, the reader, an editorially led news site and magazine but journalism costs money and we rely on advertising, print and digital revenues to help to support them.

With the Covid-19 pandemic having a major impact on our industry as a whole, the advertising revenues we normally receive, which helps us cover the cost of our journalists and this website, have been drastically affected.

As such we need your help. If you can support our news sites/magazines with either a small donation of even £1, or a subscription to our magazine, which costs just £33.60 per year, (inc p&P and mailed direct to your door) your generosity will help us weather the storm and continue in our quest to deliver quality journalism.

As a subscriber, you will have unlimited access to our web site and magazine. You'll also be offered VIP invitations to our events, preferential rates to all our awards and get access to exclusive newsletters and content.

Just click here to subscribe and in the meantime may I wish you the very best.

Latest news

Related news

By continuing to use the site, you agree to the use of cookies. more information

The cookie settings on this website are set to "allow cookies" to give you the best browsing experience possible. If you continue to use this website without changing your cookie settings or you click "Accept" below then you are consenting to this.