The new Prime Minister, Theresa May, has assembled her team to take the country forward as we face issues such as Brexit, settling the markets, maintaining employment and ensuring economic growth. Amongst the top team is:
- Philip Hammond – Chancellor of the Exchequer
- Boris Johnson – Foreign Secretary
- Amber Rudd – Home Secretary
- Michael Fallon – Defence Secretary
- David Davis – Secretary of State for Exiting the EU, also known as “Brexit secretary”
- Liam Fox – Secretary of State for International Trade
Naturally, there is significant interest and perhaps a large degree of concern as to how the Brexit negotiations will affect the UK over the coming years and the new “Brexit secretary” will hopefully provide some insight in the near future. We have considered the potential business tax, personal tax, VAT and employment tax implications of Brexit in our previous blog posts.
Our tax team here at Wilkins Kennedy has been watching with interest as Philip Hammond, the new Chancellor, has set out his initial views on the challenges to the UK economy. During the course of the EU referendum campaign, Mr Hammond’s predecessor had warned of an emergency budget with tax rises afoot in the event of a vote to leave. This was calmed post-vote with the announcement of the intention to reduce corporation tax to 15%.
Naturally, the economic landscape has changed significantly since the last Budget in March 2016, but I am reminded that we were hoping to return to a budget surplus by 2019/20, albeit of this, £3.5bn related to unidentified efficiency savings!
The Chancellor does indeed seem to have a huge task ahead. The UK remains an excellent place for international companies to set up in business and I believe it is important that the business and tax environment remains attractive for these businesses. Maintaining important tax exemptions (such as Substantial Shareholding Exemption, Dividends Exemption and no dividend withholding taxes) will, in my view, be critical as we move forward with a different relationship with the EU.
In addition to the above, we need to ensure that UK businesses continue to operate in an environment where it is possible to obtain investment and where we can attract skilled workers. Once again, we have important tax incentives to assist with these objectives, which I would hope to see maintained and indeed extended. Reliefs such as Enterprise Investment Scheme, Business Investment Relief, Research & Development Tax Credits, Employee Shareholder Status, Enterprise Management Incentive Share Options, Entrepreneurs’ Relief, Investors’ Relief all contribute towards an environment of encouraging investment and employment.
Finally, what of the property market? The last few budget announcements have seen some rather significant tax rises for buy to let investors. Is this going to continue, and indeed should it continue? Whilst the theory is that the tax changes will assist first time buyers to enter the market; is that really the case. Perhaps supply of property and availability of finance are the greater issues and until these are sorted, the tax changes may simply be placing upward pressure on rental values…either way, I would be surprised if there is no action taken to rationalise the present position.
So with all of the tax incentives I would like to see retained and enhanced and with yesterday’s suggestion from the Chancellor that he sees infrastructure investment as important, from where will the funding come? Perhaps that is the subject of another blog entirely, but continued economic growth and giving our entrepreneurial clients the opportunity to develop will surely contribute.
I am sure that there are many more issues facing your business or indeed personal tax affairs, so please do speak with you usual WK contact to discuss how we can help.