Budget 2018 – the Countdown – what might be coming
On Monday 29 October, earlier than usual, Philip Hammond will lay out his plans for the UK economy when he delivers his Autumn Budget.
It’s a challenging time for this particular budget scheduled as it is five months before the UK is set to leave the EU and before a Brexit deal has been negotiated. These factors alone bring with them significant uncertainty.
The Prime Minister has already committed £20bn to the NHS by 2023 and a continuing freeze on fuel duty has also already been announced. Because of the Brexit uncertainties, it seems likely that the Chancellor will wish to keep some money in reserve should the economy be adversely impacted because of and after Brexit and whilst he may set out his spending plans he may be cautious about implementation until more is known about how Brexit will end up – perhaps looking to come back to us with a fuller budget in the Spring of 2019.
Following our review of what experts in the finance industry are suggesting, here, in brief, are some key predictions for Budget 2018 and what it could have in store.
Taxation of digital companies
The introduction of a digital services tax – there have been constant calls for action to be taken to ensure that such companies pay their fair share of tax – thus potentially easing the pressure on traditional high street retailers – perhaps such a tax will be announced but state that more detail will follow in a Spring Budget. This would allow further time for the impact of Brexit to be understood and for an international co-operation/agreement to be reached regarding the taxation of such organisations.
IR35 and employers – an extension of recent reform to the private sector
If you have or work with contractor clients, IR35 is a piece of legislation you will be familiar with. The reform of the IR35 legislation in April last year, designed to increase compliance for the self-employed and to ensure that contractors are paying what the Government believes to be the correct levels of tax and National Insurance applied to workers in the public sector only but there is strong speculation that similar changes will now be introduced in relation to workers in the private sector. We need to hope that any changes will be introduced and be effective only from 2020, but as usual, the devil will be in the detailed budget notes issued by HMRC rather than in the Chancellor’s speech.
Property
Some have speculated about a stamp duty charge on non-residents purchasing residential property in the UK – however, there are concerns that this might adversely affect the housing market.
Personal Taxes
On Budget day, the Chancellor will look to tell us how he’ll repay the Government’s significant borrowings and honour existing spending promises [e.g. the £20bn for the NHS].
The measures noted above will help him raise funds largely from the business sector, but he will also take comfort from recent polls suggesting that the British public are ready to pay more tax and it seems a high expectation that he will ask us to do just that.
It’s possible that for anyone earning over £150,000 a year he may well remove the pensions annual allowance and the annual exempt amount for capital gains tax, as ways of raising more money from the wealthy without raising tax rates.
However, to also cater to and for existing spending commitments, more than this contribution will be required.
It’s thought possible by some that rate increases will be applied across all classes of NIC, and by adding NI to salary sacrificed pension contributions.
In some quarters it is believed that the Chancellor could try to simplify and improve two underused products in the tax system. The approved employee share scheme rules (which appear complex and in need of reform), so changes are anticipated in that area and possibly changes to the lifetime ISA.
BTCSoftware
We will be following the developments from the Chancellor’s Autumn Budget as they emerge and our software and app will adapt to reflect new tax rates and changes. We will ensure the accountants and tax advisers we support have all the tools they need to help their clients comply with the latest changes and regulations.
