Tax bills cut and National Living Wage increased

The Chancellor’s Autumn Statement has cut tax bills for employees by 2% with effect from 6 January. This is a fairly small piece of good news for many employees scrambling to keep their real wages constant in an era of stubbornly elevated inflation and the ’fiscal drag’ of frozen allowances.

In the same statement, the Chancellor also granted all those of the National Living Wage a 10% pay rise to £11.44 an hour from next April – all paid for by employers. This pay rise will have follow-on implications higher up the pay scale for all employers. Work has been encouraged and rewards increased but we await the radical simplification to the system of tax and benefits which we advocated in our Open Letter.

Rumours of Inheritance Tax reform are never far away from the big set-piece statements and that may feature again next year. We remain of the view that a change to Capital Gains Tax under which legatees who inherit a deceased person’s business do so at historic base cost rather than an uprated probate value would discourage a common view that ‘holding till death’ is the best approach. We say such a policy would encourage more businesses to be given in life - to a more dynamic second generation.