SME tax expert predicts government tax stranglehold in 2022


Soaring government borrowing and rising interest rates could hit SMEs harder, warns SME tax expert

Leading SME tax expert urges companies to take advantage of new and expanded programs while they can, ahead of rising inflation and a likely Chancellor’s ‘tax grab’ in 2022.

Robert Wardle, head of North West taxation at Azets, the top 10 UK accounting firms, predicts that stricter rules could be introduced in the spring, as well as the withdrawal of existing support measures.

In last week’s fall budget, the Chancellor confirmed that the economy is expected to return to its pre-Covid level, with 6.4% growth expected by the end of 2021. Unemployment is also at a lower level than initially expected – is expected to peak at 5.2% instead of the previously forecast 12% – while the Office of Fiscal Responsibility forecast for business investment has also increased.

Despite apparent optimism, Robert Wardle predicts new challenges for SMEs, with inflation at 3.1% in September expected to average 4% next year, and demand exceeding supply in most areas. industries, creating manufacturing delays and product shortages.

Many SMEs are also struggling to recover from the end of the holiday regime and increased energy needs, straining prices and doubling the global cost of oil and gas.

Robert Wardle said:

“The Chancellor presented a relatively optimistic fall budget, but other challenges lie ahead and, for many SMEs in the Northwest, the support measures available today will not be enough to offset the rise in bills in the North West. over the next 12 months. SMEs should seek professional advice to ensure that they take full advantage of all available allowances, with inflation expected to continue to rise and the extended payback loan program ending June 30, 2022. “

Rishi Sunak announced the extension of the Recovery Loan Scheme (RLS) during the fall budget, making it possible to finance SMEs at a reduced cost and to make available loans that lenders would find difficult to finance under their daily “business as usual” policy,

The Chancellor also announced a series of commercial rate cuts, with the retail, hospitality and leisure sector receiving a 50% discount on commercial rates, worth around $ 7 billion. of pounds sterling.

Robert Wardle urged SMEs to take advantage of these schemes, with 1.25% increases in national insurance contributions already confirmed from April 2022 and corporate tax rising from 19% to 25% from April 2023, as well as planned changes to the Inheritance Tax (IHT) and Capital Gains Tax (CGT) following recent simplification reviews by the Office of Tax Simplification .

He highlighted the additional steps businesses can take now to optimize their financial situation.

  • Take advantage of the Annual Investment Allowances (AIA), which will continue at their current rate of £ 1million until March 31, 2023, helping companies invest.
  • Consider selling assets and stocks as soon as possible as long as Business Asset Disposal Relief (formerly Entrepreneurs’ Relief) is still available to help reduce CGT.

Robert Wardle added:

“Businesses need to plan ahead, with spring only five months away and no confirmation on additional measures that might be introduced in the next budget. The surge in public borrowing and the continued rise in interest rates will force the government to increase tax levies in order to face crippling costs. As always, SMEs could be the hardest hit and must optimize their financial situation to prepare for a possible tax grab from April 2022. “


About Author

Leave A Reply