Business braces itself for last spring Budget
Philip Hammond will deliver his final Spring Budget on Wednesday. Matt Hodgson, tax partner at PKF Cooper Parry, looks ahead at what businesses can expect from the Chancellor’s statement.
Some would say that it’s a welcome end of an era when Philip Hammond delivers his final Spring Budget on Wednesday. In his Autumn Statement, the Chancellor announced that in future, or at least as long as the Conservatives are in government, there will only be one annual Autumn Budget, which will announce the major tax changes for the country, with the Spring Budget replaced with a fiscal statement.
While this may not seem like a big deal, for individuals and businesses it will provide much more certainty when planning their tax affairs.
So what can we expect from the Budget? Well, despite reports of better than expected tax revenues and a £29bn ‘windfall’ due to lower than expected public borrowing, it’s unlikely that we’ll see any significant tax giveaways given the continued public sector austerity and the Government’s challenge to rebalance the books. On a more positive note, not tinkering with taxes means minimal disruption to existing tax legislation, particularly at a time when a number of major changes are already being implemented.
One of the biggest is Making Tax Digital, HMRC’s flagship initiative for transforming the tax system by making tax administration more effective, more efficient and generally easier for taxpayers through the introduction of a fully digital tax system. It will also mean the end of the tax return.
However, the plans have received some criticism from professionals and industry bodies alike who, whilst in favour of digitising the system, have voiced concerns over the timescales for implementing the new system, the proposed quarterly reporting and the £10,000 threshold for reporting, which many argue should match the VAT threshold of £83,000.
With the country in an ongoing state of Brexit-related uncertainty, the last thing UK businesses need are major changes to tax rates, particularly much-relied upon reliefs such as R&D tax credits and the annual exemption for capital expenditure.
At this time, businesses need to focus on strategic opportunities for growth and tax legislation should be designed to support that.
