On Tuesday 6 October 2020, we were delighted to welcome Sir Edward Troup to a webinar to discuss the prospects for UK tax reform in 2021 and beyond. You can watch his full conversation with our Head of Tax, John Barnett, below.
Sir Edward was Director General for Tax and Welfare at the Treasury and Executive Chair and Permanent Secretary of HMRC. By watching the recording of the webinar you will hear his explanation of the processes behind tax reform and how to influence the direction of future tax policy. His views on potential tax reform included:
- There could be tax changes (or at least announcements of future tax changes) in April, but – given the need not to damage the economy – it is more likely to be longer.
- Quantitative Easing and inflation are ultimately not the way out of this; taxes will have to rise and spending come down. Only the 'big three' taxes (income tax, National Insurance, VAT) are capable of raising sufficient money so these will have to go up.
- Major reforms to CGT are less likely than piecemeal ones – Sir Edward commented that the UK wasn’t very good at major reforms and therefore he didn’t think there would be the political will for a major reform of CGT – but he could see some changes around the edges/rates as part of the price for reform of the big three.
- The internal Treasury view is not particularly favourable towards Business and Agricultural reliefs for Inheritance Tax, believing them to be poorly targeted and not good value for money. However, this is counter-balanced by businessmen and farmers being a powerful constituency.
- The Office of Tax Simplification (which, while notionally independent, sits within the Treasury) carries weight but often no more than external organisations such as the Chartered Institute of Taxation or STEP.
- While a Wealth Tax (which is currently being debated) might actually be one of the few taxes which could theoretically raise reasonably large sums of money, he is sceptical that it would happen. There are lots of issues but the main one is likely to be that pensions and main residence get exempted – which could remove 80 per cent of accumulated wealth – at which point it no longer raises very much money and, in that case, is unlikely to be worth the political fallout.
Please click the link below to watch the webinar. If you’d like an accessible version of this webinar, please email Events@burges-salmon.com