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It seems like just the other day that we had a Budget speech – oh wait, that’s right, we did. This is our second of 2017 after the Chancellor announced he was moving his big day from Spring to Autumn.
So what does ‘Spreadsheet Phil’ have in store for British businesses? The Chancellor finds himself in a tricky spot. The possibility of a no deal Brexit and the tension between him and Theresa May might push Hammond into delivering a cautious Budget.
At the same time, the rumour mill says this could be Hammond’s last Budget. So maybe he will want to go out with a bang, not a whimper.
Here are some of the predictions doing the rounds on what the Chancellor will announce next Tuesday.
The last business rates revaluation in April caused significant controversy. It was the biggest in years. and the last three revaluations have seen a significant increase in the burden of this tax. Manufacturing and high street retail have suffered, in particular.
At present, these rate rises are linked to the controversial and moribund retail price index (RPI). Both the FSB and CBI have been extremely vocal in their call to link rate rises to the lower consumer price index (CPI) instead.
This proposal offers an easy and popular move for Hammond to make. The Communities Secretary Sajid Javid has said he is working on more Business Rates support which will be announced in the Budget.
In his Budget prediction, EY’s Chris Sanger said Hammond might increase the rates of capital allowances or the Annual Investment Allowance (potentially reversing the recent reduction in the annual investment allowance from £500,000 to £200,000, providing the relief up front).
It’s a change that RSM believes will be announced “at a stretch”, however. But it could be a boon at a time where the government foreign direct investment.
The OTS’s recent suggestion around reducing the VAT threshold caused a stir. The UK’s £85,000 threshold is one of the world’s highest, more than four times the EU average of £20,000.
The proposal formed part of the OTS’s broader simplification review into VAT. We can certainly expect Hammond to acknowledge the findings and perhaps rule out some of the more radical proposals.
The announcement of public consultations on numerous VAT issues, however, does seem likely.
We can expect an update on the much-vaunted Business tax roadmap. The roadmap sets out the government’s plans for business taxes to 2020 and beyond. The aim is to provide long-term clarity needed for investment.
Between Brexit and the delayed post-election implementation of the Finance Bill, British businesses will be seeking certainty. Reiterating his vision and providing more detail will be an easy way to offer some much-needed stability.
It’s not that long ago that erstwhile Chancellor George Osborne was toying with the notion of bringing the Corporation Tax rate below 15% by 2020.
But with that Chancellor’s ousting, those combative plans have faded from the headlines. The current target is to reduce the rate to 17% by 1 April 2020, from the current 19% rate.
Continued economic uncertainty, however, makes the announcement of further cuts unlikely.
The consultation on the government’s Patient Capital Review concluded in September. But it has all gone rather quiet. An update on 22 November could return the issue to the spotlight.
We expected almost nothing.
We got almost nothing.