Given the immediate economic outlook it seems inconceivable that the planned increase to Corporation Tax from 19% to 25%, earmarked to come into force in April 2023, will go ahead. To further help businesses, Ms Truss has said that she will reform business rates, albeit that nothing specific has been floated yet.
In 2008, the then Chancellor Alastair Darling cut Value Added Tax (‘VAT’) in response to the financial crisis – this move was applauded at the time. Ms Truss is apparently considering a radical reduction to VAT by 5%. Such a move could stoke inflation and would probably not hugely benefit middle earners. Furthermore, a VAT cut, particularly when combined with suspension of the Green Levy, could be very costly for the Treasury.
Interestingly, Ms Truss has also said that she will review Inheritance Tax (‘IHT’) as part of the general review of the tax system. Indeed, she may be tempted to abolish IHT altogether, perhaps replacing it with a Wealth Tax. However, such a move may well require some consultation for which there may not be enough time, with the next General Election having to be held by early 2024.