Budget 2018: Accountants list hopes and fears
As Monday’s Budget threatens some awkward client conversations for practitioners, the AccountingWEB community has drawn up their hopes and fears wishlist.
With the government’s clampdown on off-payroll workers in the public sector possibly foreshadowing a private sector rollout, an ever-expanding tax code and not to mention the impending Making Tax Digital regime, accountants in practice will be poised with their pen in hand on Monday, ready to scribble down any changes for their affected clients.
Predicting what Philip Hammond will likely say at the Budget has previously been a relatively safe job. Unlike his predecessor George Osborne, the Chancellor has not pulled any rabbits out of the red dispatch box. Perhaps learning a lesson from March 2017's Class 4 NIC U-turn fiasco, he has presented his speech with minimal fuss (aside from the occasional dad joke and “tiggerific” quip). His credentials for serving a Budget without faff were further cemented when he decided two big fiscal events a year was one too many.
But that was when the UK government wasn’t close to packing its bags before the 29 March 2019 EU leaving date. That's why many commentators have assumed Hammond can’t escape this year’s Budget without having to announce something fairly substantial.
Will this be a newsworthy Budget?
Not everyone believes it will be as newsworthy as Budget-watchers hope. As Brexit negotiations still bounce between Brussels and London, AccountingWEB regular Glenn Martin suspects this year’s Budget may be “a bit of a non-event”.
“He will be keeping his powder dry in case there is a need for a panic Budget following a no deal ‘wotsit’ in March 2019,” said Martin.
Likewise, Ireallyshouldknowthisbut hopes Hammond will do very little: "he isn't much of a tinkerer," said the AccountingWEB member.
Added to that, with Theresa May’s facing escalating vitriol from her backbench Brexiteers, AccountingWEB member Trecar also believes the chances are that “Hammond will do all he can to avoid rocking the boat in case a general election suddenly appears on the horizon”.
An uneventful Budget would certainly appeal to practitioners. Echoing the sentiments of many accountants in practice, the ICPA’s Tony Margaritelli said: “The wretched tax code is getting so big it would be nice if Hammond kept the changes short and sweet and to a minimum.”
But if Hammond is set on tinkering, high on many AccountingWEB members’ Budget wishlist would be for a self-employed (and client)-friendly Budget.
Matrix, for instance, would not like to see the all too familiar “raid on small businesses and middle earners” to keep the NHS afloat. Instead, they would like to see an increased tax on large corporations and “incentives for small businesses such as an increase in employment allowance and no change to dividend allowance”, and no change to pension relief.
And there lies the fear for many AccountingWEB members. Irked by rumours posted on Any Answers that Hammond plans a tax crackdown on the self-employed, some members like Red Five are already prepared for the effect it will have on their contractor client base.
But Ireallyshouldknowthisbut believes IR35 will be too hard a nut for the government to crack in this year’s Budget, predicting that “[the government] will be very disappointed by [industry's] response which is likely to be a shoulder shrug and carry on as before as opposed to the capitulation we saw for the public sector who just put everyone on PAYE until they quit.”
However, Justin Bryant is hoping for a different tweak that he feels could solve this perennial Budget fear at a stroke. “There seems to be an equally bizarre obsession by the Tories in not increasing fuel duty by a few pence (which would easily solve this supposed IR35 tax gap with a lot less agony all round and an environmental benefit too),” he said.
But the AccountingWEB community knows better than to bank on their hopes and fears, and also plumped for a couple of Budget safe bets.
Adam1234 expects Hammond will take some “easy tax grabs” such as an increase in SDLT for non-residents, a flat rate relief for pension contributions, a freeze to the VAT threshold (“I don't think he will be brave enough to reduce it,” he notes), a 'Google' Tax, and maybe the scrapping of the flat rate VAT scheme.
Matrix equally has a long list which includes a “carved out” Making Tax Digital (“to pretend it is ready”) and the abolition of dividend allowance/increase in tax on dividends. “But would prefer off-payroll rules instead since would only affect contractors and not all small businesses who take more risk,” added the member.
Matrix also expects the Chancellor to renege on increasing the personal allowance, opting to freeze it instead.
Let’s wait and see
But unlike his outspoken brethren, AccountingWEB member Trecar has stayed circumspect about Budget possibilities around clients.
“When undergoing my tax training I was advised to never guess at what might happen because, for one thing, you will more than likely get it wrong. For another, our role is to act and advise on what is there, not on what might be there.”