UK Budget

I don't mind Mondays - yesterday's UK Budget

John Shenton John Shenton

Yesterday's first Monday UK Budget for over 56 years was neither manic nor blue.

The Chancellor tried to deliver an upbeat giveaway budget with a promise that the end to austerity was in sight and that this was a Budget "for hard working families". This theme continued throughout his speech.  
 
There were the usual promises of giveaways but noticeably many of them were not immediate but in the future. Other previously announced measures were rolled out again as if they were new ideas.
 
There was help for the High Street and small businesses through business rate reductions and apprentice schemes. Taxpayers generally will be better off through higher allowances and the freezing of most duties. Money for the NHS, especially in the area of mental health, as well as more cash for schools - although this sum was dwarfed by the money for potholes!
 
The Chancellor has made a bold move in seeking to try and impose additional tax (2%) on the Digital giants but I expect that this is simply a hurry up call to the rest of the world to get its act together to look at the issues from a global perspective.
 
There was continued rhetoric around the use of plastic and a levy announced if the plastic is 30% or less recyclable.
 
As for the Channel Islands was there anything to be concerned about - well the short answer is probably no.

  • There were the usual general swipes at anti avoidance, evasion, offshore compliance and some very targeted measures to close some of the more aggressive tax planning that was being undertaken - virtually all onshore might I add. As the legislation becomes more and more complex unforeseen opportunities will always arise which are subsequently closed and heralded as stopping avoidance
  • Additional rules were also introduced to strengthen the position of HMRC in relation to collection of tax (preferred creditor) and to make Directors and other persons involved in tax avoidance, evasion or phoenixism jointly and severally liable for company tax liabilities where there is a risk that the company may deliberately enter insolvency
  • The draft legislation was released to bring non-resident companies within the scope of UK corporation tax from 6 April 2020 - there is now time to consider the draft legislation, in particular any transitional arrangements
  • Income from intangible property, held in low-tax jurisdictions, to the extent that it relates to UK sales will be taxed from 6 April 2019, with an anti-avoidance rule that applies from yesterday. Changes have been made to the previous proposals including collecting the tax by directly taxing offshore entities that realise intangible property rather than through applying a withholding tax. The tax has been widened to include embedded royalties and income from the indirect exploitation of intangible property in the UK market through unrelated parties. There will be certain exemptions and a de minimus level
  • A consultation will be launched in January 2019 in relation to a Stamp Duty Land Tax surcharge of 1% for non-residents looking to buy residential property in England and Northern Ireland
  • The UK Government has also promised to publish an updated offshore tax compliance strategy
  • Air Passenger Duty on short haul flights has been frozen again but expect to pay more for your long haul journeys.

So all in all not much to report. It was clear that the Chancellor wanted to present a feel good Budget given all the uncertainty around Brexit and present a message to the British public that austerity was coming to an end and the boom times may just be returning.
 
However Brexit casts a heavy cloud as to whether it will be boom or bust for the UK and we will just have to wait for the financials to see whether we have a flat economy or Boomtown Stats!