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The last Budget before the UK leaves the EU will be delivered by the Chancellor next Monday, 29th October. As ever, there is no shortage of speculation over what will be in the famous Red Box, and so we now take the opportunity to point out what we already know, and make a few bold predictions!
There are suggestions that there will be a further SDLT increase on buy-to-let purchases, in addition to the 3% surcharge introduced in April 2016. We have also had confirmation of a further surcharge on overseas buyers.
It has already been announced that the freeze on fuel duty will be maintained for another year. Given that the Chancellor had indicated that this would be scrapped, along with the fact that fuel prices have hit record levels regardless, this news is extremely welcome.
‘The Amazon Tax’
It won’t be confined to Amazon of course, but it is highly likely that we will get more information surrounding the proposed taxing of tech giants. There seems to be general agreement that such companies ought to be paying more tax in the UK, and the advantage their trading style gives them over high street businesses restricted.
Class 2 National Insurance Contributions
Class 2 NICs were due to be abolished on 6th April 2019, a move which will now not go ahead.
Watch out for a possible restriction to the scope of business property relief to those more closely involved with the business, and tightening up of agricultural property relief. Conversely there may be an increase to the basic ‘Nil Rate Band’ which has been frozen at £325,000 since 2009.
Capital Gains Tax
There is speculation that the CGT rates will rise from the current 10% and 20% (18% and 28% for gains on residential property). Also, a few voices have speculated that the generous 10% ‘Entrepreneurs Relief’ rate may come under examination, most likely via a restriction to the circumstances in which it can apply.
It wouldn’t be a Budget without rumours about possible reforms of the tax legislation surrounding pensions, but this year speculation is particularly intense. Moneywise magazine has listed no fewer than eight possible reforms, and it will surprise no-one to learn that all of these would, if implemented, involve a less generous system than applies currently. We won’t get all eight of these changes, indeed we may not get any, but some reform is highly likely, and anyone thinking of making pension contributions will be well advised to do so now.
All in all the Budget will certainly be interesting, if nothing else. How much of all this will happen in reality? We’ll know on Monday!
Andrew Cowe, Tax Manager, Brearley & Co
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