In a speech on 27 January 2023, Chancellor Jeremy Hunt indicated the UK government’s focus continues to be to reduce inflation (in line with the Prime Minister’s commitment to cut inflation in half, although the Bank of England already expected inflation to ‘fall sharply’ from mid-2023).
Noting ‘the importance of low taxes in creating incentives and fostering the animal spirits that spur economic growth’, Mr Hunt also said that ‘the best tax cut right now is a cut in inflation’ in order to provide necessary economic and financial stability.
Referencing ‘low taxes’ several times during a wide-ranging speech, Hunt set the government’s direction of travel, saying that the UK’s ambition should be to have ‘nothing less than the most competitive tax regime of any major country’, but that this would mean restraint on spending to make a lower tax economy possible. Perhaps the chancellor will reveal more in his budget on 15 March.
Charlotte Sallabank, tax partner at Katten UK LLP said: ‘The chancellor highlighted that he believed that the UK needs to lower taxes. The chancellor said he believed that high taxes directly affect incentives which inform business decisions as to whether to invest into the UK. This is not the first time the government has used this rhetoric to describe its economic mandate. Over the last couple of years, the government has consistently mentioned that it believes that the UK needs to maintain its competitive economic advantage in the global market in order to encourage investment. In many of the recent tax consultations that the government has launched, the need for economic competitiveness has been put forward as the main catalyst for taking steps towards changing parts of the taxation system. Lowering taxes must be adequately balanced – the government will need to ensure that when it legislates for these tax decreases it also protects against potential tax evasion or avoidance. HMRC are currently trying to reclaim around £45bn in unpaid taxes – the government should ensure that it does not add to HMRC’s workload in this respect.
‘The government could consider some more purpose-built regimes, such as the new qualifying asset holding company regime, which offer reduced taxes in a specific and contained way. This will ensure that lowered taxes are targeted in a direct way and so have a good chance of actually encouraging business investment in the UK’, she added.
In a speech on 27 January 2023, Chancellor Jeremy Hunt indicated the UK government’s focus continues to be to reduce inflation (in line with the Prime Minister’s commitment to cut inflation in half, although the Bank of England already expected inflation to ‘fall sharply’ from mid-2023).
Noting ‘the importance of low taxes in creating incentives and fostering the animal spirits that spur economic growth’, Mr Hunt also said that ‘the best tax cut right now is a cut in inflation’ in order to provide necessary economic and financial stability.
Referencing ‘low taxes’ several times during a wide-ranging speech, Hunt set the government’s direction of travel, saying that the UK’s ambition should be to have ‘nothing less than the most competitive tax regime of any major country’, but that this would mean restraint on spending to make a lower tax economy possible. Perhaps the chancellor will reveal more in his budget on 15 March.
Charlotte Sallabank, tax partner at Katten UK LLP said: ‘The chancellor highlighted that he believed that the UK needs to lower taxes. The chancellor said he believed that high taxes directly affect incentives which inform business decisions as to whether to invest into the UK. This is not the first time the government has used this rhetoric to describe its economic mandate. Over the last couple of years, the government has consistently mentioned that it believes that the UK needs to maintain its competitive economic advantage in the global market in order to encourage investment. In many of the recent tax consultations that the government has launched, the need for economic competitiveness has been put forward as the main catalyst for taking steps towards changing parts of the taxation system. Lowering taxes must be adequately balanced – the government will need to ensure that when it legislates for these tax decreases it also protects against potential tax evasion or avoidance. HMRC are currently trying to reclaim around £45bn in unpaid taxes – the government should ensure that it does not add to HMRC’s workload in this respect.
‘The government could consider some more purpose-built regimes, such as the new qualifying asset holding company regime, which offer reduced taxes in a specific and contained way. This will ensure that lowered taxes are targeted in a direct way and so have a good chance of actually encouraging business investment in the UK’, she added.
