On Wednesday 8 March, international competitiveness, Stamp Duty, tax simplification, the gig economy and business rates are expected to be some of the issues to be dealt with by Philip Hammond’s 2017 Spring Budget statement.
James Hender and Lucy Brennan, partners in the Private Wealth Group at Saffery Champness, offer their predictions on what this week’s Budget will tackle.
James Hender, Head of the firm’s Private Wealth Group commented:
“As Theresa May gears up to trigger Article 50, you could be forgiven for assuming this will be a fairly uneventful Budget. Mr Hammond is generally cautious by nature and, with so much still up in the air and his new-fangled, post-Article 50 Autumn Budget only a few months away, this may well be a statement of consolidation rather more than intent. The Chancellor himself has already said that, despite getting a slightly fatter purse than expected, now is not the time for a spending spree.
“That being said, it will be near impossible to disassociate the Budget from the raft of new policies coming into force next month - particularly to corporation tax, mortgage interest relief and inheritance tax, as well as still slightly opaque changes to the non-dom regime. Whilst they may not be explicitly mentioned, observers would be well-advised to consider any new proposals with these in mind.
“One area where we may see activity is in the property sector.
“With April’s revaluation looming, the pips are beginning to squeak over business rates. Businesses up and down the country are squealing at the prospect of rates hikes, and the furore might well have reached such a fever pitch that the Chancellor cannot ignore the fallout.
“Meanwhile, recent Stamp Duty changes have arguably killed the top end of the market, with the latest figures also demonstrating that tax receipts from the highest bracket have reduced in line with the stagnation in sales. However, the Chancellor appears to be snookered. While a swift reform to the new system might be economically sound, the political realities make a backtrack extremely unlikely.
Lucy Brennan commented:
“The rise of the gig economy has significantly changed the nature of the economy and it will be interesting to see how the Chancellor proposes to tackle the challenges it poses from a tax collection perspective. In light of the slew of recent cases, gig workers are now generally held to be employees in the eyes of the law, and, while the ramifications would be various and complex, it may be that there is an attempt to make the taxman see them that way too. This could include a workaround of National Insurance contributions where non-employment businesses can have a significant economic advantage over their traditional rivals.
“We can expect the Chancellor to mention Making Tax Digital too, where, despite not being implemented until 2018, many will be hoping for greater clarity over their rights and obligations.
“We already have the new £1,000 trading allowance coming into effect in April which will streamline the tax system regarding the flexible economy, and will clean up some of the tax gap.
“While there has been recent speculation over a new death tax to fund social care, with the recent increase in probate fees the Chancellor already has a stealthy death-tax by another name and further hikes would seemingly go counter to the government’s ambition to ease the passage of assets to beneficiaries. As with any government short of money, it won’t come as a surprise to see the Chancellor pursue other soft targets in the search of funds to plug the deficit.
“On the whole, this Budget is likely to be more about pre-Brexit tinkering, with the Chancellor biding his time until the field is clearer to make a charge come the new Autumn Budget.”
Further information on the Spring Budget 2017