Philip Hammond kept his powder dry in his first Spring budget as Chancellor of the Exchequer. He did however ensure that he is well and truly off Jeremy Corbyn’s Christmas card list with a barrage of witty jibes. Corbyn predictably attacked this budget as continuing to take from the poor and give to the rich but this argument probably wasn’t borne out by the detail. Although there were no more sledgehammer blows (we have had enough of those already) this budget demonstrates a continuous theme of tackling perceived abuses and unfairness head on.
Many of our budget changes have been announced previously but there will be taxpayers who will be sorry that these are still on the agenda. Higher rate tax deductibility of interest for property investors will still be phased out by 2020/2021 despite protestations from Cherie Blair (who may have to think again about those Bristol flats!). Arguably this is one of the most dramatic tax changes in history as it can involve tax being payable when there are losses.
Hammond’s obsession with equalising tax between sole traders and employees gives cause for concern. He has addressed this with an eventual 2% increase in national insurance for sole traders but what will be next? This may be the final straw that will blow many partnerships out of the water and encourage them to incorporate. Thankfully that bridge hasn’t been burned yet and the main disincentive here is a relatively benign decrease in the tax-free dividend exemption from £5,000 to £2,000.
Along with the massive changes to the taxation of long-term non UK domiciled individuals and casting the IHT net ever wider, maybe Hammond will close the deficit. In the light of all these apparent hurdles, good sensible tax planning and structuring should be the order of the day. Happily there are still a lot of sensible ways to structure a business or an individual’s affairs which won’t offend the growing raft of legislation.
For further details or to discuss how today’s announcements might affect you or your business please get in touch with your usual Forbes Dawson contact.
You can use this form to request us to give you a call or if you prefer just leave us a message. Please be sure to leave us a contact number or email address for you and we will get back to you as soon as we can.