Autumn Budget 2017: Predictions

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Traditionally the run-up to the Budget is punctuated by policy leaks, but apart from a VAT research document here, and a driverless cars announcement there, the Budget rumour mill has been a little quiet this time around.

Has the Spring Budget covered most of the government’s bases? Has HM Treasury has been locked down? Or has backbench MPs’ frantic lobbying for a quiet, ‘business as usual’ Budget meant that there’s nothing worth leaking?

Here at AccountingWEB we’re not averse to a bit of unsubstantiated speculation, so we’ve applied our patented ‘Phils’ prediction scale to see what’s coming – five being the most likely, one being the least.

Here are the areas we think may (or may not) be covered:

* * *

Tax avoidance and evasion

While tax commentators argue that the government’s existing avoidance measures are working and need time to bed in, the recent Paradise Papers furore will almost certainly force the Chancellor to act.

Verdict: A subject Mr Hammond can’t avoid. Five Phils

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* * *

VAT threshold reduction

When the OTS simplification of VAT review was released, its suggestion (not recommendation!) was to look at a reduction in the £85,000 threshold. While this would be a revenue raiser, small business groups pointed out that this would increase admin burdens and potentially increase prices.

Verdict: While there may be some VAT tinkering around the edges, a threshold reduction would be a bold move. Bold, but not impossible. Two Phils

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* * *

IR35 rolled out to the private sector

From April 6 2017, IR35 status for public sector contracts has been determined by the public sector client rather than by the contractor, and HMRC’s view is that this has gone well. We could see an announcement in this Budget that a similar rule change will apply to contracts in the private sector, with a start date of April 2019 or April 2020, after some consultation on the details of implementation.

Verdict: Given that the bulk of the legislation is already in place, this could be an easy win. Four Phils 

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* * *

Tax-efficient investments (EIS and SEIS)

One rumour which escaped the Chancellor’s red box early is that the Enterprise Investment Scheme (EIS) is set for reform, possibly by reversing the increase in 2011 of the income tax relief from 30% to 20%. The Seed Enterprise Investment Scheme may also be revised in a similar way.

Verdict: A bit of rate tinkering could help bring in some extra cash. Four Phils

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* * *

Merge income tax and NI

Many commentators see this as a simplification of an over-complex and outdated system, and a combined rate may bring pull in higher revenues for the Treasury. However, it’s a complex change to push through and has knock-on effects on issues like pension payments.

Verdict: Unlikely to happen for a number of reasons, Parliamentary time being one of them. One Phil

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* * *

Business rates

The last business rates revaluation in April caused significant controversy around the increased burden the rates were causing businesses. Both the FSB and CBI have been vocal in their call to link any future business rate rises to the consumer price index (CPI), which tends to have a lower value than the RPI that is the current bench-mark of inflation.

Verdict: A potentially complex move given everything at stake, but could win the Chancellor friends in the business lobby. Three Phils

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* * *

Stamp duty

The increasing of both SDLT and ATED rates or the lowering of thresholds could prove a tempting money-spinner for the government. The Chancellor is also said to be pondering a possible SDLT holiday for first-time buyers.

Verdict: Expect the Chancellor to make a move. Five Phils

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About Tom Herbert

Tom is editor at AccountingWEB, responsible for all editorial content on the site. If you have any comments or suggestions for us get in touch.

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21st Nov 2017 17:11

Maybe I'm being a scaremonger but I am wondering whether the fact that MTD has been deferred for all those not under the VAT limit means that the limit will be lowered so more will come within the MTD net?

See here:
https://www.accountingweb.co.uk/tax/business-tax/vat-threshold-cut-propo...

Thanks (3)
to JAADAMS
21st Nov 2017 22:23

I wouldn't dream of calling you a scaremonger Jennifer :-) It's certainly a connection that's been highlighted both on the site and in the AWeb office, but the idea of reducing the VAT limit seems a radical, if not completely impossible, proposal...

Thanks (0)
22nd Nov 2017 09:13

I have to say I think you underestimate the rollout of IR35 to the private sector. I'd expect it to be a solid 5, and could even be as early as April 2018.

Thanks (0)