While this month's budget was aimed at helping the economy cope in the wake of the growing threat of coronavirus or Covid-19, tax received some notable mentions.
The newly appointed Chancellor Rishi Sunak doubled the Junior Isa (Jisa) Limit, more than double the amount it was previously; increasing to £9000 from £4368 per year for from April.
Jisas
Commentators largely welcomed the move but fell short of fully endorsing it.
Andrew Dixon, head of wealth planning at Kleinwort Hambros, says: “More than doubling the amount that can be put into a Junior ISA or Child Trust Fund annually will be welcome for families looking to save for their child’s future.”
“If saving the full amount each year, this would amount to total subscriptions into a tax free savings account or investment portfolio, of £162,000 by the child’s 18th birthday.”
But he cautions: “Mr Sunak may have given a glimpse into a government that is not afraid to spend, however the stagnation of the UK economy and action taken by the Bank of England indicates there is still a long way to go before the announcements are felt.”
This point is also made by Rachael Griffin, tax and financial planning expert at Quilter.
She says: “Although this will be music to the ears of many Junior ISA holders who may be currently hitting their subscription limits, it may not be properly considered by many Child Trust Fund holders.
"Since they were scrapped in 2012, many parents will have forgotten that they even opened up an account and will not be aware of this generous increase in the subscription limit.”
She concludes: “It would be wise for the government to raise awareness of the funds and the increased subscription limit to ensure that parents are making the most of the tax-efficient savings on offer for their children.”
Tax evasion
Mr Sunak also made a notable commitment to reduce tax evasion through announcing that HMRC will raise £4.4bn by 2024-2025 by further targeting those evading and avoiding tax.
Dawn Register, partner in tax dispute resolution at BDO says: “It not clear exactly how this figure will be collected, but HMRC has mentioned preventing the illicit trade of tobacco, tackling Construction Industry Scheme (CIS) abuse and making it more difficult for non-compliant traders to operate in the hidden economy, with taxi and hire vehicle firms specifically mentioned.
“This is an obvious and ongoing agenda by the Conservative government to tackle tax evasion and avoidance as after many spending promises today the Chancellor desperately needs to raise money. The £35 billion tax gap is something of a “hidden war chest” to prise open."
