Those of us working in the world of tax will have been excited to hear first of the General Election and then hints of a tax raising Budget during which previous awkward manifesto pledges from 2015 can be conveniently forgotten.
Going a step further, the majority of the finance bill has been sidelined due to lack of time for Parliamentary debate. This potentially leaves the Treasury’s plans in an awful mess that will require some kind of swift remedy, whichever party (or parties) takes office on 8 June.
When, as his first public declaration as Chancellor of the Exchequer, Philip Hammond announced that there would be two Budgets in 2017, most practitioners will probably have groaned, although true enthusiasts will have been fired up at the prospect of writing even more booklets and delivering more lectures than ever.
While the General Election is far from ideal in almost every sense, the refusal of Teresa May to commit to the previous party line of freezing income tax, capital gains tax and NIC must inevitably lead to speculation that we could get a second Budget sometime in the summer holiday period, prior to the “normal” November Budget already announced.
Being a prudent accountant, your columnist has not set foot inside a betting shop in living memory. Therefore he does not know the odds on the various possible tax rises. However, here are a few tips:
- An increase in NIC for the self-employed. This is a particularly novel idea that I'm sure nobody else has thought about.
- Alternatively, a 2% increase in NIC for all. In an ideal world, this will impact employers, employees and the self-employed equally.
- A 50% rate of income tax for those earning over £150,000 (that was a joke but if Jeremy Corbyn moves into 10 Downing Street in mid-June it has to be an odds-on bet).
- The extension of VAT to goods such as books and certain previously exempt or zero-rated items as well as some services with low or zero rates.
- An increase in the headline rate of VAT to 21% or 22%.
- Removal of certain capital gains tax exemptions.
- Increases in stealth taxes on things such as insurance premiums, air travel and dear old tobacco.
With a big budget deficit to fill and money desperately needed in many areas as the European exit gain speed, tax rises seem inevitable. If nothing else, I can hardly wait for two more Philip Hammond Budget speeches in the next six or so months.