Budget 2020: The drama builds
AccountingWEB and our colleagues at PracticeWEB are buckling down for one of the most hotly anticipated Budget presentations for years.
With fans starved of financial policy and tax proposals for more than 15 months, there’s a whole raft of consultation papers, proposals and half-baked ideas lurking in the Whitehall cupboards just waiting to be let out. But this year’s Budget has become less of an annual policy statement than a financial soap opera with more plot twists than EastEnders.
Earlier this month, we were treated to the ultimate shock as leading character Sajid Javid bowed out in Boris Johnson’s cabinet reshuffle before getting his big turn at the dispatch box. He was replaced by his understudy as chief secretary to the Treasury, Rishi Sunak. That’s one former investment banker (Goldman Sachs) taking over from another (Deutsche Bank), so at least we can expect some continuity, in style if not substance.
But the character change does throw some extra spice into the plot. Will Sunak pick up the script left behind by his successor or will Dominic Cumming’s wonks be working on last-minute rewrites to satisfy the showrunner in Number 10?
TaxTV’s Giles Mooney predicted that Javid’s tighter hold on the purse strings will be loosened by his successor to support some of the Prime Minister’s grander ideas for infrastructure investment and economic levelling between the North and South. Javid was also rumoured to be considering reforms to entrepreneurs’ relief and a radical overhaul of inheritance tax.
After waiting more than a year for a Budget, the FT this week quoted government sources to the effect that the 11 March Budget would be the first of a “trilogy” for 2020 – the perfect set-up for the old joke about why Budgets are like buses…
The spin coming out from the Treasury is that they need more time to assess the economic impact of the coronavirus before committing too heavily to new spending plans, but that sounds like a convenient retrospective rationale for the understandable reticence of a first-time Chancellor to charge ahead with reforms he didn’t shape – the spectre of pastygate continues to haunt 100 Parliament Street nearly 8 years after the event.
Digging into the detail to plan our editorial coverage, there are all sorts of proposals and consultations on the grid. Entrepreneurs’ relief reform appeals to Boris Johnson because it gives his government an opportunity to look tough on taxing rich people, but it would shake loose a couple of billion that could be diverted to a creaking National Health Service.
The Treasury sources quoted by the Financial Times also indicated that corporation tax would be frozen at its current rate, rather than continuing with the planned reduction to 17%.
But let’s have a look at some of the other options on the table:
- IR35 off-payroll rules for the private sector are being reviewed, but not delayed. Since taking on the new job, Sunak said he has “spent time with HMRC to ensure they are not going to be at all heavy-handed for the first year to give people time to adjust”, counteracting previous comments from the tax department. So we’re certain there will be some paperwork, but we’ll only find out whether it points to any developments on the day.
- The loan charge – always a heated topic, the possibility of further changes was hinted at in the government response to Morse review last month, but Boris Johnson has intervened since. A prime candidate to get parked until November to minimise negative reactions.
- Digital services tax – a classic will-he-won’t-he plotline. The measure has reached the draft legislation stage for Finance Bill 2020 and was confirmed by Sajiv Javid at Davos. But objections and threats of retaliation from the US might be grounds for taking a more considered look. Perhaps a 50/50 bet for 11 March.
- Business rates review – this has been the subject of intense lobbying from all directions for years, but hard to predict whether the Chancellor will pay heed to high street retailers and set it in motion.
- The mansion tax is another of those prime ministerial whims that was being talked up at the beginning of February, but receding almost as quickly in the face of grumbles from Tory MPs. The FT predicted that this would be kicked into the long grass until the autumn.
- Other sources suggest Sunak may run with the planned inheritance tax (IHT) reforms to build up coffers for spending on infrastructure.
- Anti-avoidance measures for agricultural relief and business property relief could be tightened to bring in an extra £1bn or so, the Daily Mail predicted.
- Crackdowns on pension contribution tax reliefs, workforce skills initiatives and increases in fuel duties are likely to feature in reviews for possible action in the autumn Budget, according to the FT.
Even that brief sweep is enough to keep the Treasury scriptwriters busy with new storylines for the next 10 months. We can safely assume there will be another Budget around November, but when will the other episode of the planned Budget trilogy take place? And what form will it take?
Maybe we’ve reached the end of the line for the soap opera format. If so, the only logical place to go would be a reality TV “Tax Island” production where the UK public gets to listen and watch as Treasury and tax officials parade their pet policies – and then vote on which ones to throw out.
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AccountingWEB’s interim Editor in Chief has been with the site since 1999 and returned to the editorial hot seat in March 2020 to lead the hunt for a long-term successor... Send a DM if you're interested! When not tending to the needs of AccountingWEB members and geeking out on their technology habits, he devotes much of his time to his oddball...