The last ever Spring Budget takes place on 8 March 2017, with a new Autumn Budget taking its place later in the year. Thereafter, the Spring Budget will be replaced by a Spring Statement, which is expected to be an update on the country’s finances with no substantive announcements on tax legislation.
Whilst the exact course of the UK’s departure from the EU is still not clear, widespread announcements on tax appear unlikely at the Budget. Saying that, there is speculation that corporate taxes could be further reduced to make the UK even more attractive for businesses going forwards, as the Government puts into motion a longer-term tax policy fit for Britain’s new position in the international economy.
Even with that backdrop, Britain’s tax legislation is in need of urgent reform in some areas and these are Blick Rothenberg’s five suggestions to the Chancellor for the last ever Spring Budget:
- 3% stamp duty land tax ("SDLT") surcharge – This was effectively a tax rate rise ‘by the back door’ and has had a severe effect on the UK housing market. The rules are complex and result in unfair outcomes in numerous innocent situations e.g. parents taking an interest in a child’s property for mortgage lending purposes or as a means of asset security. The government should abolish the surcharge and would be better introducing a SDLT exemption or deferment for first time buyers.
- Five rates of capital gains tax ("CGT") – An 8% surcharge applies to capital gains on residential property and carried interest. This means that the UK has five different rates of CGT that could apply, and it is unnecessary and complicated. A flat rate of 20% CGT applying to all capital gains (other than those gains which qualify for Entrepreneurs’ Relief) would be far simpler.
- Inheritance tax main residence nil rate band – This should be abolished before it takes effect (from 6 April 2017). It is a complicated mechanism and not available to estates worth over £2m. A better approach would be to have a phased increase to the standard nil rate band which has remained frozen at £325,000 for almost ten years.
- Entrepreneurs’ Relief – The lifetime allowance should be increased to £25 million. A number of individuals have fully used their £10m current lifetime limit on previous business sales. Increasing the limit would encourage such entrepreneurs to set up new business ventures.
- Personal allowance for all – The personal allowance is tapered away by £1 for every £2 of income above £100,000, creating a 60% effective rate of tax in this banding. As the personal allowance increases, the effect of this 60% rate is felt more. The personal allowance should be available to all taxpayers, and it is one of the most hated facets of the UK’s personal tax system that some are denied it.
For more information please contact your usual Blick Rothenberg contact, or Nimesh Shah on +44 (0)20 7544 8746 or at email@example.com