The first Autumn Budget since the new schedule was announced will be delivered, by the Chancellor, on Wednesday 22 November. As is typically the case, in the weeks leading up to the speech, there has been a great deal of speculation about what may or may not feature.
With it being the first Budget since the general election, will Philip Hammond use it as a chance to implement a massive shake-up of the system or will he err on the side of caution and relinquish the opportunity to make big changes. Whilst we can’t say for certain what the Chancellor will do we can say, with some confidence, that many businesses are in agreement about what they want to come out of the Budget red box.
Business rates and the upfront cost of doing business in the UK
Philip Hammond is under increasing pressure to rethink a planned business rates increase, due to take effect in April 2018. Rates are due to rise by 3.9%, in line with inflation, but as businesses are already challenged by mounting upfront costs this could leave many teetering on a knifes edge. Businesses and official organisations are calling on the Chancellor to forgo the increase and focus on cultivating confidence and incentivising investment.
Aside from this, the business rates system itself is calling out for reform, something that we are keen to see happen. In April 2017, following the most recent overdue revaluation, many businesses saw a dramatic increase in their bills and in the Spring Budget 2017, the Chancellor was forced to make provisions for the worst affected. He promised a relief package amounting to more than £400m but the delivery of this has been plagued by delays and at present many local councils have still yet to revise bills for businesses under their jurisdiction.
Currently, revaluations happen every 5 years but, by conducting these more regularly, such drastic and uncompromising consequences could perhaps be avoided.
The Budget is the perfect opportunity for the Government to tackle business rates, restore some faith in its objectives and reaffirm its intention to help the most vulnerable within the business community. Failure to act will undoubtedly undermine innovation, investment and ultimately growth, the opposite of what the Government should hope to achieve.
Making Tax Digital and Brexit still causing concern for many businesses
Earlier in the year, the Government announced a new timetable for Making Tax Digital which replaced the original April 2018 implementation date with the following:
- From April 2019, only businesses with turnover above the VAT threshold (currently £85,000) will be required to keep digital records and only for VAT purposes;
- businesses will not be required to keep digital records, or to update HMRC quarterly, for other taxes until at least 2020.
Many, however, are still concerned that the roll-out of MTD will begin way before it’s ready, with a few of the rules still very unclear. There are also concerns that far more rigorous testing is still required to ensure a set-up that is as error-free as possible.
Furthermore, the digitisation of VAT in April 2019 coincides with the UK’s withdrawal from the EU. Brexit will undoubtedly affect MTD and organisations, such as the Institute of Chartered Accountants in England & Wales (ICAEW), are urging the Government to focus its attention on facilitating a smooth roll-out of the regime and ensuring an appropriate post-Brexit system is in place.
Though it’s unlikely that any big MTD announcements will feature, it is hoped that the Government will provide clarity where it is needed so that we can begin to have a better understanding of how things will work from April 2019 onwards.
Brexit itself represents major uncertainty for many businesses who are struggling to picture and prepare for the future. On the 22 November, the Chancellor must demonstrate the Government’s commitment to getting Britain in shape ahead of time.
Less change, more control
Britain has the most complex tax system in the world and it is full to the brim with unnecessary intricacies; the result of tinkering and tweaking over time.
By all accounts, too much ‘tinkering’ creates a certain mistrust towards the Government as businesses find it increasingly difficult to accommodate so many successive changes and adjustments. The complicated UK tax system is a distraction for many as they plough time and effort into making sure they’re operating compliantly and neglect to focus on running their business.
Whilst it’s true that the tax system could indeed benefit from reform in the future, for now, at least, less change may do well to promote the stability and control that so many businesses are desperate for.
On the 22 November, we’ll be listening to the Chancellor’s address so that we can provide you with our thoughts soon after. Keep an eye on your inboxes, our website and social media as we’ll be summarising and providing commentary on the announcements.