Budget 2016: What could the Chancellor announce tomorrow?
15th March 2016 | News
It’s just 24 hours until Chancellor, George Osborne delivers his plans for the British economy in the coming year. We take a look at the potential measures Mr Osborne could present to the House of Commons on Wednesday lunchtime.
After abandoning plans to reform pensions and committing to keep income tax, VAT and National Insurance contributions at the same levels, the Chancellor will have to seek alternative ways of balancing the books to achieve a surplus by 2020.
Osborne could announce additional measures to tackle tax avoidance in the UK, to reinforce the view that the Government is focused on ensuring a fairer, more transparent tax destination for business.
There’s a possibility the Chancellor could implement civil sanctions for entrepreneurs and businesses who continue to engage in tax avoidance schemes and even implement a new criminal offence, removing the need to prove intent for offshore tax evasion.
Business tax roadmap
There is anticipation that the Chancellor will reveal more information about the Business Tax Roadmap, designed to provide greater clarity on business taxation in the UK.
HM Revenue and Customs (HMRC) has been working on a new framework for dealing with large businesses and this is key to keeping Britain ‘open for business’; providing a stable tax administration that works for taxpayers, HMRC and the country as a whole.
Osborne is likely to reveal the results of a review of the business rates system in the Budget 2016 which, according to the BDO, is well overdue for the “outdated” system.
Philip Vernon, business rates leader, PwC, said: “The 2017 revaluation will signal a shift in the tax base. The Government may take this opportunity to announce changes to reliefs with a view to simplifying the business rates system, as well as take steps to help local authorities prevent empty rates avoidance.”
The Treasury and HMRC have consulted on a number of measures affecting employment taxes and further information is expected to be revealed at Budget 2016.
One of the most important decisions to make surrounds businesses that engage workers who use personal service companies (PSCs). It’s possible the Chancellor could make these businesses liable to withhold PAYE and bear the cost of employer’s NICs on payments to so-called PSCs.
Additionally, Osborne could outline salary sacrifice arrangements, giving employees the option of choosing between cash in-hand or employee benefits such as pensions, annual leaves, childcare and other benefits, in a bid to raise revenue.
There’s a possibility the Chancellor could remove one of the most valuable reliefs in the UK capital gains tax system: Entrepreneurs’ relief.
There is a feeling within the industry that it is most certainly the most vulnerable relief and this year could well be the year it is cut.
There is speculation abound regarding fuel duties. It’s possible that Mr Osborne could raise fuel duty in line with inflation in order to help balance the books.
Critics argue that this flies in the face of the Conservative manifesto, but the Chancellor could argue that the election manifesto pledge was actually for a “real-terms freeze”.
‘Making tax digital’
Further information is expected to be divulged on HMRC’s proposal to ‘make tax digital’. The personal digital tax accounts could lead to an acceleration of tax payments for many taxpayers to ensure that tax is paid closer to when income is earned.
The new digital tax accounts could also be used to recoup tax from the self-employed community in one fell swoop, giving the Treasury a one-off tax windfall amounting to £6bn.
The prospect of an Emergency Budget
In the event that the British public votes to leave the European Union (EU) in the June referendum, it’s predicted that the Chancellor will announce an Emergency Budget shortly after in July.
The plan would be to convince global businesses based in the UK to remain, whilst encouraging British businesses not to give up on international expansion and safeguarding new foreign investment.
If you want to keep abreast of all the developments affecting you and your business from the Budget 2016, TaxAssist Accountants will be covering the Budget 2016 live tomorrow here.
We will be publishing a summary PDF to follow, putting all of our clients firmly in the picture.