Autumn Budget 2018 – What can we expect?
Posted on 23rd October 2018 by Phil Ainley MCIM
With the Autumn Budget looming large on the horizon, we look at some of the key issues expected to feature and what 2019 might hold in store.
The Autumn Budget will take place on 29 October and falls before crunch BREXIT talks take place in mid-November. So, if you’re expecting an in-depth BREXIT update, don’t. We’ll all have to wait until after the November talks to find out where we stand with the BREXIT issue.
We take a look at a few of the key points that may be addressed.
The Conservatives have a historic reputation for keeping income tax low, but recent news reports have suggested that there may be tax rises on the way.
Even though tax revenues are reportedly riding high. The need for a post BREXIT buffer and the Prime Minister’s promise to inject an extra £20bn of revenue into the NHS by 2023 will probably be the main reasons for the Chancellor’s hand being forced.
The money has to come from somewhere, and the taxpayer is usually the first point of call. None of us would begrudge paying an extra penny in the pound towards the NHS to improve its facilities and ensure its future.
Making Tax Digital
The first stage of Making Tax Digital (MTD) programme focuses on VAT and imposes new digital recording requirements for VAT registered businesses from April 2019. It was first presented in 2015 as part of the Government’s ‘Digital Roadmap’, but recent reports suggest that many business still are not fully prepared for it.
Fuel duty has been frozen for 8 years. The longer this continues, the more difficult it becomes to impose inflation related increases. The Chancellor has already hinted that the cost of maintaining the freeze would cost in the region of £38bn over the next three years.
A rise in fuel duty would help to ease the country’s fiscal pressures.
Capital Gains Tax
Entrepreneur’s tax relief is forecast to cost the Exchequer up to £2.7bn in 2018. Resolution Foundation described it as “quite possibly the worst tax relief in the UK”, so it is possible the Chancellor will look to restrict it.
Business property relief and agricultural property relief can each provide exemption from inheritance tax. The Chancellor may look to restrict the scope of business property relief to those who are more closely involved with the business, while also tightening-up the assets test for agricultural property relief.
Pension limits have been drastically cut in recent years, but it may not end there. According to the FT, we should not be surprised to see tax relief for pension contributions limited to the basic rate of income tax.
With corporation tax receipts currently at record levels, it could be argued the current low corporation tax rate is helping to stimulate profitable business. On the other hand it can be argued that it reflect low-value employment, which may not be in the long-term interests of the UK economy.
IR35 – saving the worst for last
Why is it we fear acronyms more than anything else? What with GDPR still fresh in people’s minds, IR35 and its proposed roll-out to the private sector has been whipping up fear and uncertainty in the self-employed market sector all year.
The Government consulted on ‘Off payroll working for the private sector’ in the summer, yet without draft legislation, it is widely expected that IR35 will be announced for roll-out in April 2019 to the private sector.
However, ongoing uncertainties over the Government’s CEST tool and many HMRC cases against PSC’s working for Limited companies being lost, it certainly isn’t a done deal. This could mean a new date of April 2020, which would give businesses and PSC’s more time to prepare. It would also allow more time for the way IR35 status is determined to be improved.
One thing is certain. This is one of the most important Budgets of recent years. The future of the nation’s economy, the NHS, the welfare of private sector workers, and politically, the Conservative’s position in Government all depend on a positive outcome.