Budget and Brexit – what can we expect?
Oct 11, 2019
Budget & Autumn Statement Key Dates
No one can deny that these are uncertain times. The outcome of Brexit is still an enigma, and under the new law designed to prevent a no-deal situation, if no agreement is reached by 19 October 2019 then Prime Minister Boris Johnson is required to request a three month delay from the EU. It remains unknown if this request will be accepted or not.
Meanwhile the date of the next Budget, which is usually delivered in October or November, is equally up in the air. There had been hints of a pre-election ‘giveaway Budget’ to be held in late October, but a lack of any conclusive outcome for Brexit means that no financial forecasts could have been credibly presented at such a politically sensitive time.
Preparing for Brexit – just in case
Back in May 2019 businesses were gearing up to leave the EU, and here we are again, five months later, still preparing for the same outcome. It seems businesses need to be prepared for every eventuality, along with all the costs which are associated with it.
This Brexit Planning Checklist may provide you with a useful reference tool, while you gauge the full extent of how much a no-deal Brexit will affect your business and if it is likely to cause you supply chain issues. It should be read in conjunction with the government’s online Brexit information pages, which are the most up to date sources.
Budget predictions – what to look out for
Having decided that October is not the right time to hold a Budget, it now looks likely that the Chancellor Sajid Javid will pick a date either after Brexit, or after the next General Election, depending on which one ends up coming first.
There is a good deal of speculation surrounding what the Budget will include when it is eventually presented, and many proposals will depend heavily on the circumstances of the UK’s exit from the EU. We’ve taken a look at some of the measures which have previously been raised and which may (or may not!) be included:
Off-payroll working in the private sector
The new rules for off-payroll working in the private sector will apply from April 2020, and we examine the full implications of these complex changes in our separate article.
Draft legislation for the next Finance Bill includes proposals to reduce Corporation Tax from 19% down to 17% from April 2020. It will be interesting to see if this goes ahead as planned, or if a desire to keep the UK competitive for business means that the tax rate is in fact dropped even further.
Making Tax Digital
Making Tax Digital (MTD) for VAT has already been implemented for VAT registered businesses over the £85,000 turnover threshold. The next Budget may shed more light on plans to roll out MTD to include Income Tax and/or Corporation Tax. All we know at the moment is that this won’t happen before April 2020 at the earliest.
As per the survey included in our email newsletter last month, the Office of Tax Simplification (OTS) is looking into ways of simplifying reporting and payment arrangements for the self employed. It is considering the introduction of a kind of PAYE for the self-employed, but it remains to be seen if the outcomes from the survey will be considered in time for the next budget.
Another suggestion from the OTS has been simplifying the design of Inheritance Tax (IHT). The Chancellor of the Exchequer Sajid Javid commented at the Conservative Party conference that IHT was an area that might see changes. He even indicated that the abolition of IHT was ‘something that’s on my mind’ although he acknowledged that some sensible reforms had already been made.
Accounting for import VAT
If the UK leaves the EU without a deal, one of the taxation changes which will take effect is ‘postponed accounting for VAT’. This new rule would mean that if you import goods from the EU, you will be able to declare and recover the import VAT on your next VAT return, rather than as soon as your goods arrive at the UK border which is what currently happens. You just need to make sure that you provide your VAT registration and your EORI number on your customs declaration. This is a rule which already applies to imports arriving from outside the EU.
Private Residence Relief
Following a consultation held earlier this year, charges are also planned to Private Residence Relief (PRR) which are due to be introduced next April 2020. The final period exemption will be reduced from the current 18 month period of deemed occupation to just 9 months. And lettings relief will also be changing, so that it only applies to periods when the property owner is in shared occupation with their tenant. This change will come into effect overnight with no gradual decrease during the period leading up to 6 April 2020. You can read more detail on the changes to PRR in our article from May 2019.
Brexit is likely to trigger a number of taxation changes, whatever the outcome of the deal/ no deal debate. Equally, a general election will result in a number of manifesto pledges with ensuing changes. Only time will tell – so watch this space!