The new PM could make changes to your taxes – here’s what we know.

Liz Truss has been announced as the new Prime Minister on 5 September.

This will mean potentially major changes to UK taxes as she faces the cost-of-living crisis, the ongoing ramifications of the Covid-19 pandemic and pressure to cut taxes as she has previously promised.

Changes to Personal Tax

The new PM has indicated that she will cancel the latest National Insurance (NI) increase which will greatly benefit higher-income households and have a smaller impact on lower income households.

Top earners could see a benefit of around £1,800 each year as a result of this change whereas for the lowest earners it will only result in about £7 extra annually.

There have also been conversations about a review of Inheritance Tax and taxation of families to ensure that people aren’t being penalised for taking care of children/elderly relatives.

Tax for businesses

The March 2021 Budget called for an increase of Corporation Tax from 19 to 25 per cent – which would come into effect from April 2023 and only for businesses making a profit of over £250,000 annually but Truss has plans to cancel this.

This has been reasoned as a way to strengthen incentives for investment in the UK and recover some of the tax cut costs.

Pension and Family Tax

Another area that Truss has spoken of is the pensions triple lock.

The triple lock was suspended in September 2021 but is due to be reinstated from April 2023.

Pensioners have seen the effects of this suspension as a result of inflation this year.

The state pension is predicted to increase to a double figures percentage due to inflation which will offer the desired support for the older generation.

Regarding Family Tax, Truss plans to allow married couples or those in civil partnerships to transfer their entire tax allowance to their partner and save hundreds of pounds in tax per year.

Currently, 10 per cent of the tax allowance can be transferred to a partner for those who earn less than the current tax threshold of £12,570.

For more advice on the potential changes, contact us today.

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