Tuesday, January 26, 2021

The Spring Budget – the Budget before the trigger is pulled

By James Pinchbeck, marketing partner at Streets Chartered Accountants.

Philip Hammond’s first and last Spring Budget is unlikely to have left many lasting memories, even for the most avid followers of politics or taxation. Overall it was a Budget Statement that left most, if not all, with a sense that our lives remain very much the same as they did before the Chancellor delivered his statement, both from a business and a personal perspective. Should we have expected more? Perhaps not. With an economy deemed to be more resilient than expected post Brexit, tax revenues up and growth better than forecast, what else needs to be done?

With Article 50 to be triggered before the end of the month, perhaps the Budget was as much maintaining the status quo and making a statement that the UK is open for business and ready to face the challenges as we decouple ourselves from the EU. Much of this is about ensuring the UK is competitive and productive, which relies on investment in technologies, infrastructure and skills. At the same time we need to remain attractive for businesses in terms of tax take as well as for individuals in terms of the standard of living they enjoy.

Businesses no doubt welcomed the proposed simplification in the admin for tax relief for Research and Development and the introduction of Technical training for 16 -19 year olds with T levels. In addition, those concerned about the impact of the new Business Rates will have welcomed the support and relief they can receive. Equally those businesses and self-employed that trade below the VAT threshold will welcome the decision to defer the requirement for them to do complete quarterly digital tax returns and their take up of “Making Tax Digital” by a further year.

Perhaps greater concern should be around the Chancellor’s intention to look into the differing tax regimes and the implications enjoyed by the self-employed. Seemingly he will be looking into the use of differing trading entities giving rise to inequalities or inconsistencies in the tax – this is likely to be a target for his Autumn Budget. His attack on the use of dividends through incorporation by business owners, with a reduction in the tax free amount which can be paid from £5,000 to £2,000, is a warning of things to come. This, along with the 1% increase announced for Class 4 Nic which is payable by the self employed.

Whether the Chancellor has done enough in terms of addressing the often complex and growing demands on the NHS and social care it is hard to say. Whilst additional funding of £2 billion for care no doubt is good news, perhaps it might only be a drop in the ocean. Again we will have to wait and see what incentives or tax treatments might be put in place in the Autumn Budget to meet the cost of looking after an ageing population.

Whilst Spring is a time for green shoots and optimism, the 2017 Spring Budget probably left most of us with more of a feeling of a dull grey day. Let’s hope the second Budget of 2017 is more Autumn Gold.

For further commentary, details on the announcements and the new tax rates please visit www.streetsweb.co.uk, download our free app Streets iAccountant or watch our Spring Budget 2017 video on YouTube. 

James Pinchbeck is marketing partner with Streets Chartered Accountants, a top 40 UK accountancy firm. Email info@streetsweb.co.uk or visit www.streetsweb.co.uk

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