Busy and sensible Budget
The morning after the Chancellor delivered his Budget speech, LSCA members gathered to hear expert analysis and detailed explanation of the measures announced.
Setting out the economic context and implications of the budget at the LSCA’s annual breakfast event, Warwick Lightfoot said that he saw this as a very sensible Budget, taking advantage of a significant improvement in tax receipts and a slightly better economic forecast.
He said: “The Chancellor has used better economic growth and revenue forecasts to fashion a politically astute series of public spending measures that address pressures in public services in a focused manner. He has reduced personal taxes by remitting some of the fiscal drag that has raised the tax burden, has held the ratio of public spending to GDP at around 38%, and has accepted that a modest level of borrowing is manageable in a modern economy.”
He continued that he believed that the ratio of public spending to growth looked achievable. The levels of unemployment were now down to those last seen in 1985. Unlike countries such as France and Sweden, the UK was very good at getting people into jobs. The IMF had identified the UK as one of the few economies where labour maintained a share of the national income.
Warwick concluded by saying that people would note that he had not mentioned Brexit. However, he believed that on the big economic issues that had to be decided, Brexit had very little effect and had always felt that the UK’s involvement in the EU had both good and bad points.
Summarising the practical tax points, Rebecca Benneyworth said that this had been a very ‘busy’ Budget, which had generally been well received by the lay press. However, there were some areas where the necessary technical details were not yet available, although many were expected shortly.
The increase in AIA to £1m for two years would be very welcome to capital intensive businesses, and there was a further fillip in the return of capital allowances for new business premises and structures.
Rebecca added that smaller businesses, whether retail based or not, have some extra relief from business rates, and their advisers will be relieved that the off-payroll working changes coming in 2020 will not affect them. The jump in personal allowances and the higher rate threshold had been a pleasant surprise, but capital gains tax changes to private residence relief might prove less welcome.
Rebecca also highlighted a number of other areas, such as a relaxation in the rules for charities non-primary trading profits and for reporting small cash donations. The new digital services tax had been widely expected and would come into operation in 2020.
There was to be a long consultation period until 2022 for a new plastics tax, applying to the manufacture or import of plastic packaging material containing less than 30% of recycled material. However, some proposed changes previously consulted on were not now going to be introduced, such as those to rent a room relief.
The LSCA Budget Breakfast was held on 30 October 2018 at Balls Brothers in Minster Court. As in recent years, it was presented in conjunction with the City Branch of The Institute of Directors and was introduced and chaired by Adrian Mansbridge, Chairman of the LSCA’s Taxation Committee. The closing remarks were given by Alastair King, Chairman of the IoD City Branch.
For further details about the LSCA Taxation Committee, please contact Gay Jordan, Secretariat Consultant of the LSCA.
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