Budget Number One 2017
When Philip Hammond announced in his Autumn Statement that the last ever Spring Budget would take place in 2017, many listeners must have wondered why he didn’t skip this one completely.
Having sat through an hour of almost unrelieved tedium and bad jokes, it might have been better for all concerned had the Chancellor of the Exchequer kept his powder dry until November.
Reading through the small print a.k.a. the OOTLAR, the most persistent phrase is “as announced that Budget 2016/Autumn Statement 2016” (delete as applicable). In plain English, this means that the vast majority of the new introductions are not new at all, merely repetitions of past commitments. Indeed, to add to the (lack of) excitement, the document contains no fewer than 20 draft measures all of which are going through as previously planned.
Even where there are changes, these are often minor technical adjustments to correct previous policy mistakes.
Then again, the change to the dividend exemption from £5,000 to £2,000 is something more drastic, effectively admitting that the original policy provision was a bad misjudgement.
On the plus side, no reader needs to peruse the papers tomorrow morning or, perish the thought, visit their local accountants for one of those lacklustre presentations on the annual non-event that the Budget has long been.
Even the only really radical fiscal change this time around is such a limp effort that it will irritate those on both sides of the house, let alone the country.
Having wittered on at some length about the unfairness of the dichotomy between the tax treatment of the self-employed and the employed, it seemed reasonable to assume that the Chancellor would actually make a meaningful adjustment to the way in which National Insurance Contributions are charged on the income of those who work for themselves or through one-man companies.
Judging by responses to the lunchtime live event on AccountingWEB, many subscribers are aghast at the changes that have been made, believing that life is hard enough for those forced into operating through companies by government departments and other powerful non-employers, without adding an extra 1% in each of the next two years to their Class 4 NIC bills.
At the other end of the spectrum, there can be no real justification for the massive tax (it is!) advantage that those operating via self-employment (often for little more than cosmetic reasons and tax savings) enjoy when compared to employees.
Using that logic, it would have been sensible to unify NIC rates, combining amounts received from employers and employees to create a completely level playing field.
While readers will undoubtedly be up in arms at this prospect for very good reasons, if this change were fiscally neutral and reduced the amounts payable by employees, at the same time subsidising this by taking away the advantage for other workers, at least it would have had some egalitarian logic.
However, since this might have pretty much mirrored the recent changes to business rates that have embarrassed the government so much that the Chancellor was obliged to introduce what is effectively a political U-turn, perhaps that would have been a mistake.
In any event, while I am currently in a state of dread at the thought of having to face another hour like this come November, I’ll make a note in the diary for one lunchtime in March 2018. The diary entry will read something along the lines of “celebrate Budget-free spring”. If anyone would like to join me, they are very welcome.